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A Living-Room Accent With Bite:The Personal Shark Tank

i i i

Aquariums with pet predators are therage in upscale homes; pity the other fish

Source: Rystad Energy UCube

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Global production Total approvals

chomped during a shark feed-ing frenzy and left “twitchingin the corner.”

For some reason, sharkshave become a new must-haveaccessory for luxury homes.

Real-estate developers andhigh-end buyers—including ce-lebrities like Lil’ Wayne andTracy Morgan—are installingelaborate aquariums so they cankeep the ocean’s most fearedpredators as pets.

They arealso findingthat keepingpredators withmultiple rowsof knife-sharp

teeth is often, well, compli-cated. Sharks are expensive tomaintain and surprisingly fin-icky about water conditions.

The tank alone can costfrom $15,000 up to $1 million,said Brett Raymer, co-founderof Acrylic Tank Manufactur-ing, based in Las Vegas. Thecompany builds about 20shark tanks a year in private

PleaseturntopageA10

After buying a palatialhome outside Los Angeles,Elise Ingram and her husbanddebated what to do with a“very 70s” built-in circularseating area in the livingroom. They considered turningit into a wine cellar.

Instead, they opted to fill itwith sharks.

The couple installed a 500-gallon aquar-ium, wherethey put aleopard sharkand a hound-shark, bothabout two feet long, three stingrays and a few yellow tangs.

It didn’t go swimmingly.The houndshark immediatelybegan “frantically trying to getout of the tank,” Ms. Ingramsaid. She called the aquariumcompany to remove it. “Hewas messing with the vibe ofthe tank.”

One of the other fish in thetank fared even worse. It was

BY CANDACE TAYLOR

Not so cuddly

Consumers are starting tosee higher prices for recre-ational vehicles, soda, beer andother goods that now cost moreto make as a result of recenttariffs on metals and parts.

When costs rise, manufac-turers generally must chosewhether to absorb bigger billsfor aluminum, steel and im-ported components, or pass theincreases along to customers.In recent days many manufac-turers, including Coca-Cola Co.and Polaris Industries Inc., havesaid they plan to raise prices.

U.S. steel and aluminumprices are up 33% and 11%, re-spectively, since the start of theyear, as producers and their cus-tomers begin to price in the tar-iffs that the Trump administra-tion first applied on foreign-made metal in March. Tariffs ona host of additional importedproducts from China this monthhave added costs for companiesthat use those components toassemble products in the U.S.

“We’ve had to go to the mar-ket a bit more frequently and abit more aggressively withsome price increases as of late,”said Michael Happe, chief exec-utive of recreational-vehiclemanufacturer Winnebago In-dustries Inc. Winnebagowouldn’t say how much it hasraised prices, and said it has

PleaseturntopageA4

BY PATRICK MCGROARTYAND BOB TITA

Sting ofTariffsStarts toHit Home

It handled more payments last year thanMastercard, controls the world’s larg-est money-market fund and has made loans totens of millions of people. Its online paymentsplatform completed more than $8 trillion oftransactions last year—the equivalent of morethan twice Germany’s gross domestic product.

Ant Financial Services Group, founded byChinese billionaire Jack Ma, has become theworld’s biggest financial-technology firm, driv-ing innovations that let people use theirphones for buying insurance as easily as gro-ceries, enabling millions to go weeks at a timewithout using physical cash.

Some CBS Corp. directorsdiscussed over the weekendwhether Chief Executive LeslieMoonves should step asidefrom the company pending itsinvestigation into allegations

BY KEACH HAGEYAND JOE FLINT

he sexually harassed women,according to people familiarwith the matter.

The board of CBS, which isscheduled to meet via confer-ence call Monday in advanceof its second-quarter earningsannouncement Thursday, is ex-pected to select a special com-mittee to oversee the investi-gation, the people said. Theboard intends to make a broadinquiry into CBS’s workplaceculture, not just the allegedbehavior of Mr. Moonves, theysaid.

The investigation is in re-sponse to a New Yorker articlepublished Friday, in which sixwomen who had professionaldealings with Mr. Moonves be-tween the 1980s and late2000s claimed he sexually ha-rassed them. The story carriedaccusations that CBS toleratessystemic harassment againstwomen.

“I think the board realizesas a whole that this is a very,very, very serious situation.While there is an importantLes piece to this, really, more

important to the company as awhole is that this raises seri-ous issues with regard to cul-ture and harassment through-out the company,” said oneperson familiar with the mat-ter.

The Wall Street Journal re-ported Friday that the CBSboard planned to hire an out-side law firm to conduct theprobe.

Mr. Moonves expressed re-gret in the New Yorker articlefor any behavior that made

PleaseturntopageA8

CBS to Weigh CEO’s FateSome board membersdiscuss whether CEOMoonves should stepaside pending probe

That success is also putting a target on thecompany’s back. China, even more than theU.S., is now under pressure to reckon with thedisruptive power of a financial-technology gi-ant.

China’s banks complain Ant siphons awaytheir deposits, causing them to pay higher in-terest rates, and is a factor leading them toclose branches and ATMs. One commentator ata state-owned television channel describedAnt’s huge money-market fund as “a vampiresucking blood from banks.”

Chinese authorities, clearly increasingly un-comfortable about Ant’s scale, have started toput limits on the activities it can pursue. Ear-

PleaseturntopageA10

BY STELLA YIFAN XIE

JackMa Is RattlingTheChinese Banking SystemFinancial-technology giant Ant draws warning shots from regulators

Oil Supply Gets PinchedApprovals of new crude-oil projects have slipped in recent years asproducers spend less, raising the specter of a supply crunch. B1

INSIDE

� Lingling Wei: Beyond U.S.,China trade has turned.......... A2

� Kudlow expects EU farmtalks soon.................................... A4

� No joy for U.S. almondfarmers.......................................... B9

Help Wanted, Degree Not Neededoptions today,” said Amy Gla-ser, senior vice president ofAdecco Group, a staffingagency with about 10,000company clients in search ofemployees. “If a company re-quires a degree, two rounds ofinterviews and a test for hardskills, candidates can go downthe street to another employerwho will make them an offer

PleaseturntopageA6

were stacked with résumés.Now employers want tobroaden the pool of job candi-dates, leading many to reversethose minimum qualifications.

Across incomes and indus-tries, the lower bar to gettinghired is helping self-taughtprogrammers attain software-engineering jobs at Intel Corp.,and improving the odds forhigh-school graduates who as-pire to be branch managers atTerminix pest control.

“Candidates have so many

Employers are abandoningpreferences for college de-grees and specific skill sets ina bid to fill jobs faster, provid-ing Americans looking for anew career with their bestchance of success in years.

Many companies raised ed-ucation and experience re-quirements for job applicantsafter the recession, when mil-lions were out of work and hu-man-resources departments

BY KELSEY GEE

� Midwest rushes to keep laid-off workers................................. A6

SURPRISE SPINAT TOUR

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ALERTS TOPREVENT HOT-CAR DEATHS

LIFE & ARTS, A11

PHONE-SIZECAMERA ADDSBIG FEATURES

BUSINESS & FINANCE, B1

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SJ

CONTENTSBanking & Finance B9Business News...... B3Crossword.............. A14Heard on Street... B10Life & Arts....... A11-13Markets............... B8,10

Opinion.............. A15-17Outlook.........................A2Sports....................... A14Technology............... B4U.S. News......... A2-4,6Weather................... A14World News........ A7-9

s 2018 Dow Jones & Company, Inc.All Rights Reserved

>

What’sNews

� Consumers are startingto see higher prices forrecreational vehicles,soda, beer and other goodsthat now cost more tomake as a result of recenttariffs onmetals and parts.A1� U.S. employers are aban-doning jobs criteria put inplace after the recessionwhen applicants were plen-tiful to speed hiring nowthat the market is tight. A1� Trump renewed athreat to shut down thegovernment unless Congressprovides money for a south-ern-border wall and enactsnew immigration curbs. A4�Wildfires spread acrossCalifornia, with the north-ern Carr blaze expandingto more than 90,000 acresand killing at least six. A3� Pope Francis acceptedMcCarrick’s resignationafter allegations of sexualabuse were made againstthe U.S. cardinal. A3� Hun Sen claimed vic-tory in a Cambodian elec-tion widely seen as rigged,after the arrest last yearof the prime minister’schief political rival. A9� Zimbabweans were setto go to the polls Monday inthe first election since theouster in November of long-time strongman Mugabe. A8� A recent cease-fire andother developments in Af-ghanistan are raisinghopes for the prospect oftalks to end the war there. A7� Geraint Thomas wonthe Tour de France forTeam Sky, in theWelshman’sfirst Grand Tour victory. A14

Some CBS directors dis-cussed over the weekend

whether CEOMoonves shouldstep aside from the companypending its investigation intoallegations that he sexu-ally harassed women. A1� The broad U.S. stockmarket is within 2% of anew high despite big dropsby some of the tech giantsthat have powered recentgains, reassuring investors.B1� The Fed is wrestlingwith what to do once in-terest rates it is liftingreach a setting that neitherslows nor spurs growth. A2� Crude across the globeis being used faster than itis being replaced, raising theprospect of even higher oilprices in the coming years. B1� Investors shut out ofsome of the highest-returnhedge funds are turning tothe same managers’ openfunds, whose results aregenerally not as good. B1� Startup stock exchangeIEX has failed to attractany company listings de-spite wooing prospects forseveral years. B1� EuroChem is miningpotash in Russia, in a movethat could shake up amarketin the fertilizer dominated bya handful of producers. B3� Chinese regulators dis-claimed responsibility forQualcomm’s abandoningits acquisition of NXP, sayingthe proposal failed to addresscompetition concerns. B4�Walmart is exploring asubscription video-stream-ing service that wouldseek to challenge Netflixand Amazon. B4

Business&Finance

World-Wide

Ousted Leader Casts a Shadow on Zimbabwe’s Election

JEKESAINJIKIZANA/AGENCE

FRANCE-PRESSE/GETTYIMAGES

A STRONGMAN SPEAKS: Robert Mugabe on Sunday weighed in on the eve of Zimbabwe’s first vote since his ouster last year, sayinghe would back the opposition in an election being monitored by international observers for signs of irregularities. A8

A2 | Monday, July 30, 2018 * * THEWALL STREET JOURNAL.

U.S. NEWS

now, is unlikely to impressPresident Trump, who fo-cuses on the U.S.’s wideningtrade deficit with China andis waging a trade battleaimed at narrowing that.

Some economists and ana-lysts argue China is hardlyrebalancing. The country’sstatus as the world’s factoryfloor—it purchases raw ma-terials and components fromoverseas and then assemblesand ships the final productsout—remains little changed,they say. Moreover, they ar-gue, the recent shift inChina’s current account ismainly due to rising com-modity prices, which pushup China’s import costs.

Excluding the country’simports of commodities suchas oil and iron ore, China’scurrent-account surplus thisyear is near the top of its

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LOUISIANA

New Orleans ShootingKills Three People

Two armed individuals walkedup to a crowd gathered Satur-day evening outside a strip mallin New Orleans and opened fire,killing three people and wound-ing seven more.

The shooting happened on abusy thoroughfare about 3 milesfrom the French Quarter, policesaid.

Police Chief Michael Harrisonsaid the two suspects had a rifleand a handgun. He said they ap-peared to have fired indiscrimi-nately into the crowd, striking 10people.

—Associated Press

GEORGIA

Rep. Lewis ReleasedFrom the Hospital

U.S. Rep. John Lewis, the 78-year-old civil rights icon and vet-eran congressman was releasedfrom the hospital Sunday eve-ning after his weekend admis-sion for an undisclosed reason.

“All tests have been com-pleted, and doctors have givenhim a clean bill of health,” Lewisspokeswoman Brenda Jones saidin an email

Mr. Lewis, a Democrat, playeda key role in the civil-rightsmovement and marched withthe Rev. Martin Luther King Jr.in 1965 in Selma, Ala.

—Associated Press

MONTANA

Grizzly Bears AreKilled on Highway

Tribal wildlife officials said afamily of grizzly bears was killedas the female bruin and her twocubs tried to cross a highway onnorthwestern Montana’s Flat-head Indian Reservation.

Tribal wildlife officials saybears increasingly are dispersingwest across Montana’s MissionValley. They warn motorists towatch for the animals, which areprotected as a threatened spe-cies in the area.

—Associated Pressmostly good reasons—a largejump in the number of Ameri-cans looking for jobs who pre-viously hadn’t been. Excludingvolatile food and energy cate-gories, inflation rose 2% inMay from one year earlier. Itwas the first time in six yearsthat so-called core inflation,using the Fed’s preferredgauge, reached the centralbank’s target.

Fed researchers recently ex-amined the possibilities of thetwo inflation scenarios.

One study analyzed data forU.S. metro areas to see whathappens to inflation when un-employment is very low.

Economists have long heldthat inflation rises as unem-ployment falls, and vice versa.But the relationship, called thePhillips curve, has appearedvery weak in recent decades.Inflation has remained tameeven as the jobless rate fell to4% in June from 10% in 2009.The Fed economists found,however, that inflation pickedup more quickly once the job-less rate fell below 3.75%.

One of the researchers,Alan Detmeister, who nowworks at UBS Group AG, saidthat when the Fed began thestudy in 2016, he considered it“highly unlikely” the U.S. un-

in 2007. The ratio has beendeclining since then andfirms including MorganStanley and Standard Char-tered estimate that such asurplus will further drop to0.5% of GDP in 2019.

“It’s a sea change,” saidMr. Hu. “China can use thenarrowing current-accountsurplus as evidence that itdoesn’t have a mercantilistpolicy of keeping the yuanartificially cheap to gain aleg up on global trade.”

Pressured by its tradingpartners, China allowed theyuan to appreciate almost40% against a basket of cur-rencies beginning in 2007, atrend that reversed inmid-2015, when China’s cen-tral bank devalued the cur-rency by almost 2%. The Chi-nese currency has weakenedmore against both the basket

of currencies and the dollarin recent weeks.

B eijing is pointing tothe fall in its tradesurplus—and the swing

into a deficit in the firstquarter of the year—as evi-dence that it is followingthrough on a plan to driveits economy more throughconsumption, rather than ex-ports and investments.

“The near-balance in ourcurrent account reflects thedomestic economy’s shift to-ward high-quality growth,”says Wang Chunying, spokes-woman at the State Adminis-tration of Foreign Exchange.

Official data show con-sumption contributed to78.5% of China’s growth inthe first half of the year, upfrom 36% in 2005.

The trend, at least for

THE OUTLOOK | LinglingWei

Beyond U.S., China Trade Has TurnedFor years,

China hassold muchmore to theworld than ithas bought.

Now, that imbalance isshrinking, helping Chineseleadership argue it no lon-ger pursues a mercantilistpolicy.

Economists say that offi-cial data set to be releasedAug. 6 likely will showChina’s current account,which measures its transac-tions with the rest of theworld, was in deficit for thesix months ended in June,essentially meaning it im-ported more than it ex-ported. Macquarie CapitalLtd. economist Larry Hu es-timates the deficit was $24billion. It would be the firsthalf-yearly deficit since thecountry joined the globaltrading system in 2001.

Increased imports of oil,iron ore and other commod-ities, along with more spend-ing by Chinese firms on for-eign financial and softwareservices, drove the turn.

For the year overall, econ-omists still expect China torun a current-account sur-plus, to the tune of $100billion, as weakening growthleads to reduced Chinesepurchases from abroad. Butthat surplus would representless than 1% of China’s grosseconomic product, its small-est surplus since 1995.

By comparison, China’scurrent-account surplusreached nearly 10% of GDP

historical range, calculatesRobin Brooks, chief econo-mist at the Washington-based Institute of Interna-tional Finance. “That showslittle rebalancing,” Mr.Brooks says.

C hina runs big deficitswith commodity pro-ducers such as Russia,

Saudi Arabia and Brazil, andwith countries includingSouth Korea and Japan,where it purchases elec-tronic components like dis-plays and memory chips toput together smartphones.Its surplus with the U.S. con-tinues to widen, fueled bystrong American demandand Chinese exporters accel-erating deliveries to avoidU.S. tariffs.

China’s merchandise sur-plus with the U.S. almostdoubled to $276 billion in2017 from the height of thefinancial crisis in 2009, ac-cording to Chinese statistics.(U.S. data show its goodsdeficit with China was $375billion last year. The discrep-ancy is because U.S. data in-clude Chinese productsshipped via Hong Kong,while Chinese data don’t.)

Brad Setser, a senior fel-low at the Council on For-eign Relations and a formerU.S. Treasury official, saidChina’s shifting current ac-count fails to capture thepressure Beijing places onglobal manufacturersthrough subsidies to statefirms and what he calls theoverall “buy China” policy.

China's current-account surplusas a percentage of GDP

China's exports as ashare of global exports

China’s trade balance

Balancing ActChina's overall trade imbalances are shrinking, but its surplus with the U.S. remains large.

Source: Macquarie Capital THEWALL STREET JOURNAL.

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ECONOMICCALENDAR

Central banks including theU.S. Federal Reserve, Bank ofJapan and Brazil’s central bankare holding policy meetings thisweek. On the data front, the eu-rozone will report second-quar-ter gross-domestic-product fig-ures, while the U.S. will showfigures on jobs.

TUESDAY: The Bank of Japanconcludes its regular policymeeting. After nearly two yearsof stasis, market watchers arecurious whether the BOJ willback away from its monetary-easing policy.

The eurozone economyslowed at the start of 2018, andsecond-quarter GDP figuresaren’t expected to rebound.

The Fed begins a two-daypolicy meeting. It is widely ex-pected to leave its benchmarkrate unchanged now and thenincrease it in September by aquarter of a percentage point toa range between 2% and 2.25%.

The U.S. Commerce Depart-ment releases the June reporton personal income and spend-ing. Economists surveyed by TheWall Street Journal expect per-sonal income to have risen 0.3%in June, with 0.4% growth forconsumer spending.

WEDNESDAY: Brazil’s centralbank is expected to keep ratessteady at a historic low of 6.5%.

FRIDAY: The U.S. Labor De-partment releases the July jobsreport. In June, the economyadded 213,000 jobs, while hun-dreds of thousands of Ameri-cans started looking for jobs,helping push the unemploymentrate up to 4%. Economists sur-veyed by the Journal forecastthat employers added 188,000to nonfarm payrolls in July, whilethe unemployment rate tickeddown to 3.9%.

U.S.WATCH

COLORADO

Charles Koch WarnsAgainst Protectionism

Billionaire Charles Kochwarned against protectionismSunday at a biannual meeting ofthe conservative network he co-founded.

“The urge to protect our-selves from change has doomedmany countries throughout his-tory,” the 82-year-old industrial-ist said in a video shown to do-nors attending the meeting.“This protectionist mind-set hasdestroyed countless businesses.”

Koch officials at timesstepped up criticism of theWhite House on such areas asimmigration and trade policy, al-though they avoided direct criti-cism of the White House in aSunday morning presentation todonors. Instead the officialsbashed the GOP on the $1.3 tril-lion spending bill.

In a briefing with reportersSunday, Mr. Koch gave a mutedresponse when asked if he issatisfied with the job PresidentDonald Trump is doing.

“We agree with some thingsand we disagree with others,” hesaid.

Asked if he felt the Trumpadministration’s trade fightscould push the U.S. economyinto a recession, Mr. Koch said,“If it’s severe enough it could.”

A White House spokesmandidn’t respond to a request forcomment.

Koch network officials notedsome gains since Mr. Trump’selection, including tax reform.

The more-than 500 donorsattending the meeting are ex-pected to contribute at least$100,000 annually to the Kochnetwork, which includes organi-zations working on politics andpublic policy.

—Jennifer Levitz

Police are searching for two suspects in Saturday’s deadly shooting outside a strip mall in New Orleans.

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employment rate would reach3.75%. “Now we’re kind of atthat point,” he said.

In the late 1960s, the lasttime unemployment fell below4% for a sustained period, in-flation steadily accelerated. Bythe 1970s, if inflation rose oneyear, consumers expected it torise at least as much the fol-lowing year—and it did. Fedofficials believe expectationscan be self-fulfilling as work-ers demand pay increases andbusinesses raise prices.

Separate Fed research pub-lished in 2016 used data fromthe 1960s to measure the levelat which inflation pressuresbegin to harm the economy.The researchers concludedthis happens when core con-sumer prices rise by 3% on asustained basis, according tothe Fed’s preferred gauge.

Economists say inflation ac-celerates when unemploymentfalls below a so-called naturallevel, which Fed officials esti-mate at 4.1% to 4.7%.

The “point at which you canget a large inflation over-shoot” approaching 3% iswhen the jobless rate falls 1.5percentage points below thenatural level, said JeremyNalewaik, the study’s author,who now works at MorganStanley.

Fed officials are also eagerto know how much workersmight benefit when unemploy-ment is low. The policy makerswonder whether people at themargins might more easilyfind jobs and become moreproductive—permanently im-proving their chances of em-ployment. This would lowerthe natural unemploymentrate and reduce the prospectof the economy overheating.

Researchers at the Cleve-land Fed, using state-leveldata, looked for signs that lowjoblessness delivered lastingbenefits to less-educated,working-age men. Their con-clusion: “Once the labor mar-ket returns to a sort of normalstate, the benefits from a tightlabor market to these disad-vantaged groups don’t lastvery long,” said Bruce Fallick,a co-author of the study.

Mr. Powell has signaled heis looking carefully at data todiscern which of the two sce-narios looks more likely.

“It’s difficult to forecast theeconomy and these conceptsthat we have,” Mr. Powell saidin July. “It’s not like the factthat water boils at 212 de-grees. The economy doesn’tboil at 4% unemployment.”

Most Federal Reserve offi-cials agree on the path for in-terest rates over roughly thenext year: proceed with grad-ual increases until borrowingcosts reach a level that neitherslows nor spurs growth.

The big question hangingover their discussions thisweek, however, is what to doafter getting to that so-calledneutral setting. The answerwill largely depend on how in-flation behaves as unemploy-ment falls, and they are poringover recent research for clues.

The studies suggest pricesmight climb faster, but not toomuch, if unemployment falls abit more. And inflation mightbecome worrisome if jobless-ness falls a lot more.

Now, Fed Chairman JeromePowell is watching for signsthe economy could go in eitherof two directions.

In one scenario, inflationaccelerates once unemploy-ment falls to very low levels,requiring more-aggressive rateincreases to keep price pres-sures in check.

In the other, a period ofsustained low unemploymentdraws more workers into thelabor force while inflationpressures stay under control.

Fed policy makers are likelyto leave their benchmark rateunchanged when their two-daypolicy meeting concludes onWednesday and wait untilSeptember for the next rise.They raised the rate twice thisyear, most recently in June toa range between 1.75% and 2%,and have penciled in two moremoves this year.

“The economy seems sostrong it seems natural thatbusinesses and consumers canlive with more neutral finan-cial interest rates,” said Chi-cago Fed President Charles Ev-ans in a recent interview.“Then it becomes more im-portant to take stock of…howmuch inflationary pressuresdo we see building up, if any.”

Fed officials want to raiserates enough to prevent therapidly expanding economyfrom overheating, but not somuch that they choke offhealthy growth prematurely.

So far, they are succeeding.The central bank is closer tomeeting its two congressionalmandates to maximize em-ployment and maintain stableprices than at any time in thepast decade.

Unemployment rose to 4%in June from 3.8% in May for

BY NICK TIMIRAOS

Fed Examines ScenariosOn Inflation, Jobless Rate

Sources: Commerce Dept; Labor Dept.

*Personal-consumption expenditures priceindex, excluding food and energy

In a concept called the Phillipscurve, falling unemployment isexpected to push inflation higher,as it did in the 1960s. But since2010, lower unemploymenthasn't had that effect.

Flatlining

THEWALL STREET JOURNAL.

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CORRECTIONS �AMPLIFICATIONSReaders can alert The Wall StreetJournal to any errors in news

articles by emailingwsjcontact@wsj.com or by calling

888-410-2667.

THEWALL STREET JOURNAL. * * * * Monday, July 30, 2018 | A3

U.S. NEWS

The job isn’t new to Mr.Marcus, who led the same of-fice on an acting basis underPresident George W. Bush.

In his work at the BrandeisCenter, Mr. Marcus filed civil-

rights complaints with the Ed-ucation Department againstuniversities with prominentPalestinian-solidarity organi-zations. Those groups, thecomplaints alleged, promoted

him to the Education Depart-ment, where he was confirmedlast month as head of thecivil-rights division.

In Mr. Marcus, the Trumpadministration has chosen anoutspoken activist againstfaith-based discrimination, inline with its agenda to elevatereligious freedom as a civil-rights concern.

Critics say his focus is toonarrow, and elevates therights of students who haven’ttraditionally faced the mostostracism in schools. In previ-ous government service, “Mr.Marcus expressed significantconcern for a student whomight be subject to harass-ment based on religion, butexpressed no similar concernabout a student’s right to befree from harassment basedon their sexual orientation orgender identity,” the Leader-

ship Conference on Civil andHuman Rights, an umbrellagroup, wrote in a letter oppos-ing his nomination.

Mr. Marcus said his long ca-reer as a civil-rights lawyerdemonstrated concern forgroups beyond Jews, pointingto his government work onhousing discrimination andthe overrepresentation of mi-norities in special education.

The Education Departmentdoesn’t have the legal author-ity to adjudicate religious biasin the nation’s public schoolsand colleges, as it does dis-crimination based on race, sexor disability. Granting it juris-diction over religious discrimi-nation, which is now left tothe Justice Department, wouldrequire new legislation.

Mr. Marcus vowed to workwithin civil-rights law to pro-tect religious minorities.

activities that amounted to“harassment” or “intimida-tion” of Jewish students.

Mr. Marcus withdrew oneof the complaints, and the oth-ers were dismissed withoutfindings.

Mr. Marcus has urged Con-gress to expand the EducationDepartment’s authority overreligious discrimination. “I ha-ven’t changed my mind,” hesaid. That puts him in linewith other administration offi-cials who have sought to ele-vate the rights of religiousAmericans as an oppressedclass in need of protection.

In coming months, Mr. Mar-cus plans to hire 65 civil-rights staffers, he said, aboutthe number the departmenthas shed since the Trump ad-ministration began. He alsoplans to review more policiesfor possible withdrawal.

WASHINGTON—As an ele-mentary-school student, KenMarcus once wandered down astreet just outside his predom-inantly Jewish hometown ofSharon, Mass., when a groupof children spotted him.

“They started throwingrocks and yelled for me to goback to my ‘Jew town,’” he re-called in a recent interview.The episode, Mr. Marcus said,shaped his view on the needfor greater civil-rights protec-tions—and particularly for amore vigorous battle againstanti-Semitism in the U.S.

That led him to found theLouis D. Brandeis Center forHuman Rights Under Law,which pursues legal avenuesto fight discrimination againstJews, especially on collegecampuses. It has now brought

BY MICHELLE HACKMAN

For Education Official, Defending Religious Freedom Is Personal

“To have so many adultsthat are dying in their primeyears of breeding is going tohave repercussions for de-cades to come,” Dr. Barronsaid.

Known as a red tide, the al-gae bloom produces toxicchemicals that can affect thecentral nervous systems offish and other animals, killingor impairing them. Exposed

sea turtles may swim in circlesand exhibit jerky body move-ments and lethargy. Thoughsome sea turtles have diedfrom boat strikes or predators,the main culprit for the in-creased mortality is the redtide, Mr. Foley said.

Red tides occur naturally inthe Gulf of Mexico, and theirduration depends on severalfactors, including sunlight and

him dating nearly half a cen-tury.

The former cardinal has pre-viously said he didn’t remem-ber the incident and that hebelieves he is innocent.

Since then, others havecome forward to accuse thearchbishop of other instances

of sex abuse and harassment.Resignation from the cardi-

nalate is extremely rare. In2015, Scottish Cardinal KeithO’Brien renounced the “rightsand privileges of a cardinal,”especially that of voting in afuture papal election, after ad-mitting to inappropriate sexualconduct with seminarians un-der his authority in the 1980s.He retained the title of cardi-nal. He died in March.

could shift back at any time.“For Redding right now, it’s

a pretty hopeless feeling,” saidEaston Waterman, a 19-year-old college student whohelped his family pack posses-sions into a vehicle.

On Saturday, PresidentTrump signed an emergencydeclaration request by Gov.Jerry Brown for federal assis-tance in the Redding-area fire-fighting efforts.

Hundreds of miles to thesouth, the 54,025-acre Fergu-son Fire, which broke out July13 outside Yosemite NationalPark, continued to expand, asa firefighter was killed bat-tling it Sunday. Another fire-fighter died in the blazeshortly after it broke out.Meanwhile, firefighters madeprogress encircling the blazewith containment lines.

Still, National Park Serviceofficials extended a closurethat began July 25 for the Yo-semite Valley to Aug. 3 from aplanned reopening of Sun-day. Although the valleywasn’t directly threatened,they said the closure wasneeded because of heavysmoke and to give firefightersmore room to work.

The infernos were just twoof 17 major wildfires that12,000 firefighters are attack-ing across the Golden State,where a fire season that oncebegan in late summer now ex-tends for much of the year be-cause of a combination ofdrought, warmer temperaturesand accumulation of deadtrees and other fuel, said ScottMcLean, deputy chief of theCalifornia Department of For-estry and Fire Protection.

SAN FRANCISCO—Wildfiresspread across California onSunday, forcing officials to ex-tend closure of the famed Yo-semite Valley and maintainevacuations for thousands ofpeople further north aroundRedding, where the death tollclimbed to at least six.

By far the most destructiveinferno so far has been theCarr Fire, which has explodedto more than 90,000 acres af-ter igniting from a vehiclespark July 23 in the tinder drybrush outside Redding.

A firestorm Thursday sentresidents of Redding and othersmaller communities in itspath fleeing for their lives,leaving at least 500 homesand other structures de-stroyed. A state fire officialestimated the tally could beseveral hundred higher.

The huge blaze—alreadyone of the top 20 in Californiahistory—has claimed at leastsix lives: Redding fire inspec-tor Jeremy Stoke; 81-year-oldDon Ray Smith, a civilian bull-dozer operator; and 70-year-old Melody Bledsoe and hertwo great-grandchildren,James Roberts, 5, and EmilyRoberts, 4. The family’s bodieswere discovered in their homein Redding that was overcomeby fire Thursday night, whenthe two men also died. Offi-cials said they had found an-other victim on Sunday, butthey had no further details.

Over the weekend, the CarrFire remained active butpushed mostly into rural areassouth and north of Redding, acity 200 miles north of SanFrancisco. But much of Red-ding, with its 92,000 resi-dents, remained on evacuationnotice as fire officials warnedthat the flames—fueled bygusty evening winds and re-lentless triple-digit heat—

BY JIM CARLTON

Deadly Fires Scorch Areas of CaliforniaState extends closureof Yosemite Valley;at least six peoplehave died in Redding

Capt. Scott Fisher, with the San Bernardino County Fire Department, surveying a wildfire-damaged neighborhood in Keswick, Calif., on Sunday.

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FrenchGulchFrenchGulch

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5

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LosAngeles

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Wind-Swept Blazes Keep Communities on EdgeThe Carr Fire, one of multiple wildfires California is working to contain, continued to growover the weekend

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wind currents. But if theymove toward shore, they canbe prolonged and intensifiedby runoff of nutrients likefarm fertilizer and treatedsewage released into water-ways, said Richard Bartleson,research scientist at the Sani-bel-Captiva ConservationFoundation, a marine labora-tory.

Last year’s Hurricane Irma,which swept across Florida,may have exacerbated the cur-rent red tide by sending asurge of nutrients into theGulf of Mexico, he said.

Normally, red-tide seasonends around April, just as seaturtles’ nesting season startsup. But the current red tidebegan in October 2017 andshows little sign of subsiding.That is the longest stretchsince the red tide that ran forabout a year and a half in2005 and 2006, scientists say.

The Sanibel-Captiva Con-servation Foundation hasfound 91 stranded sea turtlessince the start of the red tide,compared with about 30 in atypical year, Mr. Bartlesonsaid. Of those, 58 were deadand 33 were alive and taken tothe Clinic for the Rehabilita-tion of Wildlife.

The number of dead or ail-ing sea turtles washing up onFlorida’s southwestern coasthas soared due to a prolongedalgae bloom, raising concernsabout the long-term impact onendangered turtle species.

Since the start of the year,287 turtles—dead, sick or in-jured—have been stranded inthe counties of Sarasota, Char-lotte, Lee and Collier, said Al-len Foley, a wildlife biologistat the Florida Fish and Wild-life Conservation Commission.That is double the five-yearaverage for the same periodand the highest toll since 2005and 2006, when a similar al-gae bloom erupted.

The phenomenon is coincid-ing with sea turtles’ breedingseason, which runs from Aprilto October, said Heather Bar-ron, medical and research di-rector at the Clinic for the Re-habilitation of Wildlife inSanibel, Fla. Many of thestranded turtles are sexuallymature adults of vulnerablespecies, including the Kemp’sridley, which is classified asendangered, and the logger-head, which is classified asthreatened.

BY ARIAN CAMPO-FLORES

Red Tide Killing Florida’s Sea Turtles

Heather Barron, left, watches a loggerhead turtle that wasbrought to her Sanibel, Fla., facility.

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Pope Francis accepted theresignation of U.S. CardinalTheodore McCarrick, taking anextraordinary disciplinary mea-sure against a senior memberof the Catholic hierarchy afterseveral allegations of sexualabuse.

The Vatican said Saturdaythat the pope had received thecardinal’s letter of resignationfrom the College of Cardinalsthe previous evening and ac-cepted it.

The pope also suspendedthe former cardinal from the“exercise of any public minis-try” and ordered him to “re-main in a house yet to be indi-cated to him, for a life ofprayer and penance until theaccusations made against himare examined in a regular ca-nonical trial” under church law.

Archbishop McCarrick, aformer archbishop of Washing-ton, had already been prohib-ited from public ministry sincelast month, after a church in-vestigation found crediblecharges of sex abuse against

BY FRANCIS X. ROCCA

Pope Accepts ExitOf U.S. Cardinal

CardinalTheodoreMcCarrick wasonce thearchbishop ofWashington.

Ken Marcus heads the Education Department’s civil-rights unit.

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elections. Republican leadersfear their party would beblamed for shutting down thegovernment, costing themvotes during a year in whichthe party risks losing control ofthe House and is defending anarrow majority of 51 out of100 seats in the Senate.

“I don’t think it will be help-ful” for the GOP in the Novem-ber elections, Sen. Ron John-son (R., Wis.), chairman of theSenate Homeland Securitycommittee, said on CBS.

“I don’t think we’re going toshut down the government,”Rep. Steve Stivers (R., Ohio),who heads the House Republi-cans’ campaign arm, said onABC. “We’re going to get betterpolicies on immigration. Weneed border security.”

A White House official ex-pressed surprise at the presi-dent’s shutdown threat. Thetiming would be damaging, thisperson said, coming shortly be-fore midterm elections inwhich Republicans are vying toretain control of the House.House Speaker Paul Ryan (R.,Wis.) and Senate MajorityLeader Mitch McConnell (R.,

WASHINGTON—PresidentTrump renewed a threat toshut down the government un-less Congress provides moneyfor a wall at the southern bor-der and enacts new curbs onimmigration, reviving a battlehe said last month should waituntil Republicans gained moresolid majorities after the No-vember elections.

“I would be willing to ‘shutdown’ government if the Dem-ocrats do not give us the votesfor Border Security, which in-cludes the Wall!” Mr. Trumpwrote on Twitter on Sunday.“Must get rid of Lottery, Catch& Release etc. and finally go tosystem of Immigration basedon MERIT! We need great peo-ple coming into our Country!”

The threat adds a new head-ache for congressional Republi-can leaders two months beforegovernment funding expires onSept. 30. It also stands as a re-buff to Republicans who haveprivately pleaded with thepresident to avoid triggering ashutdown before the midterm

BY SIOBHAN HUGHESAND PETER NICHOLAS

PresidentThreatensShutdown

Ky.) have been working to passspending bills for months in aconcerted effort to avoid a gov-ernment shutdown just weeksbefore the midterm election.

By contrast, were the Demo-crats to take the position thatthey wouldn’t vote for a spend-ing bill unless funding for theU.S Immigration and CustomsEnforcement Agency wereeliminated, Republicans wouldbe well positioned to blamethem for a shutdown, the offi-cial said.

Sen. Tim Kaine (D., Va.)tweeted Sunday, “PresidentShutdown is at it again - howmany times will he threaten toshut down the government—putting Virginia’s and our na-tion’s economy at risk, as wellas the livelihoods of thousandsof federal workers—before herealizes this is not a game?”

Andy Surabian, a Republicanstrategist and former WhiteHouse official, said in an inter-view Sunday that Mr. Trump’stweet, underscoring his focus

on immigration, will strike achord with the die-hard voterswhom Republicans need to re-tain control of Congress.

“The midterms are going tocome down to turnout,” Mr.Surabian said. “It’s going to bewhich base is more energizedto turn out and vote. Andthere’s not an issue thattouches the president’s basemore strongly than immigra-tion.”

The threat on Sunday wasn’tthe first time that the presi-

dent has warned he mightspark a government shutdownin a bid to force through hisimmigration agenda. Last Au-gust at a rally in Phoenix, hethreatened to shut down thegovernment over border-wallfunding. He issued the same ul-timatum in April, warning thathe would have no choice but to“close down the country” un-less Congress gave him moremoney for the border wall.

—Kristina Petersoncontributed to this article.

President Trump said in his shutdown threat Sunday that he was willing to do it if he didn’t get the votes for border security and a wall.

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Mr. Weisselberg could attimes play hardball. In 2007,he was alleged to have tried toget a law firm’s bill cut in halfafter a clerical error in whichthe Trump Organization inad-vertently received a bill fromthe firm that was intended foranother client.

He threatened to inform theother client of the error unlessthe law firm agreed to a 50%discount on legal bills, accord-ing to a letter filed in a NewYork state court written by at-torney David Piedra at the lawfirm, Morrison Cohen.

The Trump Organizationdisputed its bill from MorrisonCohen in a legal dispute be-tween the two firms, whichwas settled and terms weren’tmade public. Mr. Weisselbergand his lawyer didn’t respondto requests for comment onthe incident. The Trump Or-ganization didn’t respond to arequest for comment. MorrisonCohen declined to comment.

His name also emerged inthe pending suit by the NewYork attorney general, whichalleged a “pattern of illegal

conduct” by the Donald J.Trump Foundation, includingself-dealing transactions tobenefit Mr. Trump’s personaland business interests and im-proper coordination with hispresidential campaign.

Leading up to the 2016election, the foundation was“co-opted” by the Trump cam-paign, the suit alleged, violat-ing laws governing charities’engagements in political activ-ity and related transactions.

A Trump Organizationspokeswoman has called thesuit “politics at its veryworst.” The organizationdidn’t respond to a request forcomment. Mr. Weisselberghasn’t commented publicly onthe suit.

Meantime, Mr. Weisselbergarranged for the Trump Or-ganization to pay Mr. Cohenafter Mr. Cohen made anOctober 2016 payment of$130,000 to former adult-filmstar who had alleged that shehad a sexual encounter withMr. Trump.

A person familiar with Mr.Weisselberg’s thinking said hedidn’t know about the pay-ment when he agreed to a$35,000 monthly retainer forMr. Cohen in January 2017.

For decades, Allen Weissel-berg operated in the shadowsof the Trump Organization, atrusted executive so hiddenfrom public view that one for-mer colleague described himas a “ghost man.”

Now the 71-year-old chieffinancial officer and loyal con-fidant of President Trump hasbeen thrust into the spotlight,drawn into legal mattersswirling around Mr. Trump.

As treasurer of the TrumpFoundation, Mr. Weisselbergwas cited in a civil suit filed inJune by the New York Attor-ney General’s office, allegingthat the charity engaged inself-dealing, though he wasn’ta defendant and hasn’t beenaccused of wrongdoing. Thefoundation is fighting the law-suit, saying it is without merit.

Mr. Weisselberg has beensubpoenaed to testify as a wit-ness before a federal grandjury as part of an investigationinto the activities of Mr.Trump’s former personal law-yer Michael Cohen, people fa-miliar with the matter say. Mr.Cohen hasn’t been charged,and has denied wrongdoing.

Mr. Weisselberg also hasbeen linked to hush payments totwo women who allegedly hadsex with Mr. Trump, deals thatare under scrutiny in that inves-tigation. Mr. Trump has deniedhaving sex with the women.

With his deep knowledge ofMr. Trump’s personal financeand business dealings, includ-ing throughout his presiden-tial campaign, Mr. Weisselbergcould be a critical resource forinvestigators in these legalmatters, people familiar withthe matter say.

Mr. Weisselberg didn’t re-spond to repeated requests forcomment on this article. Alawyer representing him didn’trespond to a request for com-ment. The Trump Organizationdidn’t respond to requests forcomment.

Mr. Weisselberg has beenlittle known outside of Mr.Trump’s core inner circle atthe Trump Organization. Butwithin that circle, he has longbeen a central figure in Mr.Trump’s business and founda-tion work. That role expandedafter the election, when Mr.Trump handed him, alongsideMr. Trump’s adult sons, con-trol of his financial interests.

Mr. Weisselberg also hadinvolvement in Mr. Trump’spolitical life, such as fieldingquestions from Trump admin-istration officials about thestatus of surplus inauguralfunds, according to people fa-miliar with the matter.

BY REBECCA DAVIS O’BRIENAND ALEXANDRA BERZON

Discreet CFOIs at the CenterOf Trump’s World

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CFO AllenWeisselberghas been acentral figurein Trump’sfoundationwork.

and aluminum.“Clearly it’s disruptive for

us. It’s disruptive for our cus-tomers,” CEO James Quinceysaid on a call with analysts. Hesaid he expected distributorsand retailers to pass along theincreases to consumers start-ing in the third quarter.

Executives at Sam Adamsbrewer Boston Beer Co. saidthey would raise prices up to2% in the second half of theyear. “At some point, increasedcommodity costs have to bepassed through to some extent,”Chief Executive Jim Koch saidon an earnings call Thursday.

Manufacturers have someroom to increase prices as theU.S. economy continues togrow at a robust pace, drivenby strong consumer spendingand exports. Gross domesticproduct rose at a 4.1% rate inthe second quarter, the Com-merce Department said Friday.

Strong demand for heatingand ventilation equipment ishelping manufacturers recoupmost of the added costs thathave resulted from steel andaluminum tariffs. Manufacturersof such equipment have suc-ceeded before at raising pricesto cover—and even profitfrom—higher commodity costs,said Stephen Volkmann, an ana-lyst at Jefferies & Co.

Office furniture maker Steel-case Inc. also raised prices inJune for the second time infour months as steel pricesclimbed. “It’s been a long time,if ever, that we’ve done twoprice increases back to back asquickly as we did,” Chief Exec-utive James P. Keane said.

—Doug Cameronand Jennifer Maloney

contributed to this article.

erupted after Mr. Trump im-posed tariffs on steel and alu-minum imports. Europe hadretaliated, drawing threatsfrom Mr. Trump to imposeeven bigger restrictions on im-ports of European cars.

European officials said theywere already engaged in talkswith the U.S. to boost beef im-ports and promised to seek

buying more American soy-beans following China’s deci-sion to cut imports of the cropin a separate trade dispute. Eu-ropean officials have said be-yond those specific areas, theymade clear to Washington theywouldn’t include broader discus-sion of agriculture in the talks.

“If ag [agriculture] is notpart of it, what are soybeans

doing and what’s beef doing?”Mr. Kudlow said on “Face theNation.” “In the final documentthat was signed by both, wetalked about opening marketsfor farmers and for workers.”

The joint statement put outafter the meeting mentionedonly soybeans, not agriculturemore generally, as a subject forcoming discussions.

WASHINGTON—A topTrump administration officialsaid Sunday the U.S. will “im-mediately” start negotiatingwith the European Union toforge trade agreements on farmand energy products, promising“an actual transaction” rightaway to sell more soybeans,beef and liquefied natural gasto European countries.

Larry Kudlow, PresidentTrump’s chief economic ad-viser, said he would be in-volved in the negotiations, tobe led by U.S. Trade Represen-tative Robert Lighthizer.

“We will be starting imme-diately,” Mr. Kudlow said in aninterview with CBS’s “Face theNation.” “We’ll be setting up alayered process to examine allthe different areas.”

Mr. Kudlow stressed thatbroad discussions on agricul-ture will be part of the bilateraltalks, underscoring a gap withBrussels, which has vowed tokeep the sector off the table.

Mr. Trump agreed with Eu-ropean Commission PresidentJean-Claude Juncker onWednesday to bring a truce toa trade dispute that had

BY YUKA HAYASHI

KudlowExpectsEUFarmTalksSoon

The U.S. is set to start negotiating with the EU on trade agreements over products like soybeans.

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made changes such as modify-ing RV floor plans to trim costs.

The Forest City, Iowa-basedcompany has benefited from asurge in RV sales in recentyears, driven by demand fromyounger customers, and isspending at least $25 millionto expand production.

But Mr. Happe said the tar-iffs, broader trade tensionsand rising inflation are cloud-ing the outlook for Winne-bago. “Uncertainty is never agreat thing for the economyand the more noise there isthere’s a risk that consumerswill press pause,” he said.

U.S. manufacturers havebeen on a tear. Factory outputis up 22% since a recession lowin June 2009. Industrial stockshave climbed this month ascompanies including 3M Co. andHoneywell International Inc. re-ported higher-than-expectedsales and profits. Some of thosecompanies said tariffs were lessof a concern than rising laborand shipping costs, and thatthey would make productionchanges before raising prices.

And some companies saythey believe a strong economywill support higher prices.

“We haven’t seen any push-back on the price,” Todd Blue-dorn, chief executive of heat-ing-and-cooling-systemsmaker Lennox InternationalInc., said on an investor call

ContinuedfromPageOne

ConsumersFeel EffectOf Tariffs

Chief Executive Scott Winesaid Polaris would accelerateplans to move production ofmotorcycles that it sells in Eu-rope to Poland from Iowa toavoid rising European Uniontariffs on U.S. motorcycles.

Harley-Davidson Inc. an-nounced a similar plan inJune, drawing condemnationfrom unions representing itsU.S. workers and from Presi-dent Trump. Mr. Trump saidHarley was undermining itsMade-in-America legacy.

Harley’s Chief ExecutiveMatt Levatich last Tuesdaysaid the move would keepdown the cost of its motorcy-cles in Europe. “We made thebest decision given the cir-cumstances,” he said.

Tariff costs are starting tohit consumers at the grocerystore as well. Coke onWednesday said it was takingthe unusual step of raisingsoda prices midyear in NorthAmerica because of risingcosts, including freight ratesas well as prices for plastic

last week. “We’ve seen all ourcompetitors announce similarprice increases.”

Consumer prices rose 2.9%in June from a year earlier, theLabor Department said, thehighest rate in more than sixyears. Producer prices, a mea-sure of what businesses arepaid for goods and services,have also climbed to the high-est level in years. The producer-price index rose 3.4% in Junefrom a year earlier as energyand shipping costs climbedalong with metal prices.

Polaris is raising prices onboats, motorcycles, snowmo-biles and other recreational ve-hicles to cover $15 million ofthe $40 million in tariff-relatedcosts the Minnesota-basedmanufacturer expects to pay forforeign-made steel, aluminumand components from Chinathis year. Polaris is also facingretaliatory tariffs from othercountries on products it exportsfrom the U.S., including the In-dian-brand motorcycles it shipsto Europe.

Coke is raising soda prices amid rising freight rates and other costs.

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more applicants, Burning Glassdata show. Through the end oflast year, a further one millionnew jobs were opened up tocandidates with “no experi-ence necessary,” making occu-pations such as preschoolteacher available to novicesand those without a degree.

The new shift, called “downskilling,” marks a sharp rever-sal from the immediate after-

math of the financial crisis,and bolsters a theory articu-lated by Northeastern Univer-sity economist Alicia Modes-tino: When more people arelooking for work, companiesoften inflate general skills re-quirements to find the bestfit—and did so as unemploy-ment spiked in 2008.

Now, recruiters say, thetightest job market in decades

lecting negative informationabout Mrs. Clinton.

Mr. Cohen’s reported will-ingness to contradict the pres-ident widens a growing rift be-tween the two men andsuggests he is prepared to co-operate with the governmentand share details about Mr.Trump’s personal and profes-sional dealings. Faced with thisprospect, Mr. Trump’s attor-neys and associates havesought to depict Mr. Cohen asa flawed witness whose wordcan’t be trusted.

Mr. Cohen joined the TrumpOrganization as a lawyer in2006 and transitioned into hisself-described role as Mr.Trump’s fixer, a position thatgave him a unique windowonto Mr. Trump’s practices.

The falling out comes as Mr.Cohen faces an investigationfor bank fraud and possiblecampaign-finance violations by

federal prosecutors in NewYork City. Federal investigatorsare also probing his efforts toquash negative publicity forMr. Trump during the 2016campaign. Mr. Cohen has de-nied wrongdoing and hasn’t

been charged with any crimes.Last Monday, a former fed-

eral judge overseeing a reviewof materials seized in an Aprilraid of Mr. Cohen’s premisesreleased 12 audio recordings tofederal investigators, after Mr.Trump withdrew objections.

The following day, CNN ob-

tained one of these audio re-cordings, in which Messrs. Co-hen and Trump appear todiscuss a payment to a formerPlayboy model who alleged shehad an affair with Mr. Trump.Representatives of Mr. Trumphave denied the affair tookplace.

Mr. Cohen made a practiceover the years of recordingprivate meetings in lieu of tak-ing notes, according to his at-torney, Lanny Davis. “He hadno intention of ever publiciz-ing such tapes nor any inten-tion to ever deceive anyone,”Mr. Davis said last week.

Mr. Davis on Sunday de-clined to comment on the criti-cism aimed at Mr. Cohen.

Appearing on news showsSunday morning, Mr. Giulianiworked to undercut Mr. Cohenand the impact of the record-ings. He told Fox News thatMr. Cohen is “capable, I think,

has left employers looking totamp down hiring costs withthree options: offer moremoney upfront, lower theirstandards or retrain currentstaff in coding, procurementor other necessary skills.

Rodney Apple, president ofSCM Talent Group LLC inAsheville, N.C., said if compa-nies won’t budge on compen-sation, experience or educa-tion requirements, he walksaway. “We tell them, ‘I’msorry, but we can’t help youfish for the few underpaid orunaware applicants left outthere,’ ” he said.

SCM finds workers for doz-ens of small and midsize com-panies seeking supply-chainmanagers and logistics andwarehouse operators acrossthe U.S. Mr. Apple said talentshortages are more extremethan he has seen in nearly 20years of recruiting.

Average wages haveclimbed in the past year, butrising prices of householdgoods have made those payraises less valuable to work-ers, keeping pressure on em-ployers to increase salaries orre-evaluate their target hire.

To attract more entry-levelemployees, toy maker HasbroInc. divided four marketingjobs, which it previously de-signed for business-schoolgraduates with M.B.A.s, intoeight lower-level positions.

Hasbro hiring managersoriginally sought candidateswith a two-year degree for thejobs but ultimately droppedany college requirement, aspokeswoman said. The Paw-tucket, R.I., company receivedmore than 100 applicationsand hired nine people.

As college graduates andmidcareer professionalssought jobs as hotel managers

and bookkeepers after the re-cession, hires with more quali-fications took a larger share ofpositions normally filled bythe 75 million U.S. workerswho lack a college degree. Po-sitions needing technical ex-pertise, like information secu-rity, might still requirecandidates with advancedknowledge, but many employ-ers are now more flexible withrequirements like criticalthinking, which candidates canhone at work or in school.

After the recession, Termi-nix raised the bar for over1,000 pest-control branch- andservice-manager positions torequire a two-year degree or abachelor’s degree. In January,it made degrees “preferred”but not mandatory, said BetsyVincent, senior director of tal-ent acquisition.

Anthony Whitehead workedfor five years as a Terminixbranch manager in Florida be-fore he was promoted to re-gional director in early July.That position now acceptscandidates with college de-grees or equivalent experi-ence, helping Mr. Whiteheadclinch the role despite his ear-lier decision to enter the mili-tary instead of college.

Mr. Whitehead, 35 yearsold, said his approach to jobsrequiring a degree has been“apply anyways if I have theright experience, and thenhave the education conversa-tion if I need to.”

Degrees are optional formany “experienced hire” posi-tions at chip maker Intel,which also has a “tech grad”job category the company de-scribes as fitting candidateswith relevant classroom orwork experience from techni-cal programs, such as codingboot camps.

that day.”Ms. Glaser estimates 1 in 4

of the agency’s employer cli-ents have made significantchanges to their recruitingprocess since the start of theyear, such as skipping drugtests or criminal backgroundchecks, or removing prefer-ences for a higher degree orhigh-school diploma.

Cutting job-credential re-quirements is more commonin cities such as Dallas andLouisville, Ky., where unem-ployment is lowest, Ms. Glasersaid, as well as in recruitingfor roles at call centers andwarehouses within the logis-tics operations of retailerssuch as Walmart Inc. and Am-azon.com Inc.

The share of job postingsrequesting a college degreefell to 30% in the first half of2018 from 32% for all of 2017,according to an analysis by la-bor-market research firmBurning Glass Technologies of15 million ads on websitessuch as Indeed and Craigslist.Minimum qualifications havebeen drifting lower since 2012,when companies sought col-lege graduates for 34% ofthose positions.

Long work-history require-ments have also relaxed: Only23% of entry-level jobs nowask applicants for three ormore years of experience,compared with 29% back in2012, putting an additional 1.2million jobs in closer reach of

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EmployersLower BarTo Fill Jobs

All27%

Warehouseworker29%

Mechanic30%

Preschoolteacher/child-care aide39%

Logisticsmanager23%

E-Commerceanalyst24%

Now HiringEmployers are abandoning preferencesfor college degrees and specific skillsets, according to an analysis of 29million postings.

‘No experience required’job postings

THEWALL STREET JOURNAL.Source: Burning Glass Technologies

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Medicaltranscriptionist66%

Special counsel RobertMueller’s team will take Presi-dent Trump’s former cam-paign chairman Paul Manafortto court in Alexandria, Va., onTuesday, in a trial with impli-cations reaching far beyondthe immediate charges rangingfrom tax evasion to bankfraud.

The outcome of the trial,which is expected to last threeweeks, will help determinehow the public perceives Mr.Mueller’s 14-month-long inves-tigation into interference inthe 2016 election. A convictionwould provide the specialprosecutor with momentum ashe pushes to complete the in-vestigation amid criticismfrom some Republicans thathe is leading a partisan in-quiry. An acquittal would giveMr. Mueller’s critics ammuni-tion to push for a quick end tothe special counsel’s opera-tion.

Much is at stake for thepresident as well, since he hasrepeatedly dismissed the Rus-sia probe as a “witch hunt.” Asuccessful jury trial couldblunt such characterizations.

While Mr. Mueller’s investi-gation has resulted in chargesagainst 25 Russians and fourformer advisers to Mr. Trump,the case against Mr. Manafortwill delve into his personal fi-nances largely before his workon the campaign.

Mr. Manafort also faces asecond, related criminal trialin Washington, D.C., after thisone, and could face pressureto cooperate with Mr. Mueller,depending on the outcome ofthe first trial.

Mr. Manafort has pleadednot guilty and denies all of thecharges, which include taxfraud, bank fraud and failingto file reports on foreign bankaccounts.

Mr. Manafort has arguedthat he talked to the FederalBureau of Investigation aboutmany of the allegations in2014, and believed prosecutorsweren’t interested in pursuingthe case at the time.

Prosecutors have accusedMr. Manafort of not payingtaxes on $30 million in incomefrom his work for pro-Russianpoliticians in Ukraine in theearly 2010s. Mr. Manafort alsois accused of misleading banksto obtain millions in loans in2015 and 2016 as his Ukraineincome dried up.

A spokesman for Mr.Manafort declined to com-ment.

Mr. Manafort, who has beenin prison since mid-June afterprosecutors accused him oftrying to influence witnesstestimony, appeared briefly incourt last week.

In its list of exhibits, Mr.Mueller’s team has identified436 pieces of evidence theyplan to introduce, includingthe defendant’s emails, hiscompany’s financial state-ments, bank records and pho-tos of purchases he allegedlymade with the income at issue.

Prosecutor Greg Andressaid last week that his teamwouldn’t mention during trialthe question of whetherTrump associates colludedwith Russia to interfere in the2016 election. But they wouldneed to briefly address Mr.Manafort’s role with theTrump campaign, Mr. Andrestold the judge, because it isrelevant to one of the allegedbank fraud schemes.

Moscow has denied electioninterference.

Mr. Manafort joined theTrump campaign in March2016 and had departed by Au-gust.

His longtime business dep-uty, Richard Gates, pleadedguilty earlier this year tocharges related to the Ukrainework and is cooperating withMr. Mueller. Mr. Gates is ex-pected to testify against Mr.Manafort in what could be oneof the more consequential mo-ments of the trial.

BY ARUNA VISWANATHA

ManafortTrial toFocus onFinances

unfortunately, of doctoringtapes.”

In May, Mr. Giuliani said inan interview with ABC Newsthat Mr. Cohen was an “hon-est, honorable lawyer.”

“The president feels disap-pointed,” Mr. Giuliani said onFox News. “We have assuredhim in a very strange way. Thisis a very good development,because we do have all thesetapes and these tapes willcompletely demonstrate thepresident did nothing wrong.”

Appearing Sunday on ABC,Chris Christie, a former NewJersey governor and a formeradviser to the Trump cam-paign, admonished Mr. Cohenand his advisers of the appar-ent leak about the recording ofthe payment.

“It is not in Michael Cohen’sbest interests when he doesnot have a deal yet,” Mr. Chris-tie said.

President Trump’s alliessought to discredit his formerattorney, Michael Cohen, aftera week of escalating clashesthat raised the question ofhow much Mr. Cohen may beprepared to divulge about hisformer boss.

Rudy Giuliani, Mr. Trump’slawyer, called Mr. Cohen a“pathological manipulator” and“a liar” on Fox News followingreports Mr. Cohen is preparedto allege Mr. Trump knewabout a meeting during the2016 campaign in which his el-dest son sought damaging in-formation about Democraticopponent Hillary Clinton.

Last week, Mr. Trump saidthat he had no prior knowl-edge of the meeting at TrumpTower with a Russian lawyer,which Donald Trump Jr. hadattended in the hope of col-

BY BRETT FORRESTAND PETER NICHOLAS

When DST Systems Inc. laidoff workers in Kansas City lastmonth after an acquisition, alocal economic-developmentgroup had an online job siteup within 24 hours to helpworkers connect directly withemployers.

The group was worriedworkers would leave for otheropportunities if it didn’t movefast. “Talent is perishable,”said Tim Cowden, president ofthe Kansas City Area Develop-ment Council, which createdthe site. Some 125 resumeswere uploaded to the site.

Cities across the Midwestare rushing to keep workersfrom leaving after layoffs,opening a new front in the na-tionwide scramble for labor.Although workforce cuts gen-erally are declining in sectorslike manufacturing, some busi-nesses are still eliminatingjobs—for example, after an ac-quisition. Yet with unemploy-ment at historically low levels,the overall pool of availableworkers remains small.

Compounding the Mid-west’s particularly tight jobmarket is weak labor-forcegrowth and an aging popula-tion.

Those demographic trendsare leaving many cities des-perate to hold onto theirworking-age populations, orrisk losing companies thatcan’t find enough people tokeep business humming.

Some cities in the South,like Austin, Texas, and in theWest, like Denver, have seentheir working-age populationsexplode.

Growth in Kansas City’spopulation of 25-to-54-year-olds has been flat since 2010,according to the most recentCensus Bureau data, while un-employment fell to 3.6% inMay.

Workers tend to becomemore mobile in a tight labormarket. The mean period oftime it took employers to fill avacancy in April was 31.1working days, the longest onrecord, according to the DHIhiring indicators report.

“The risk of losing peopleto better locations with betterjob opportunities is probably

more acute now than any timesince before the financial cri-sis,” said Steven Davis, aneconomist at the University ofChicago.

Sidney, Neb., a remote ruraltown of 6,500, was home toCabela’s Inc., an outdoor-gearretailer, for over 50 years; thechain employed as many as2,000 people in the town atone point.

Springfield, Mo.-based BassPro Shops in 2016 bought Ca-bela’s and started downsizingits headquarters staff in Sid-ney. Earlier this year, Bass Protook out an ad in The Wall

Street Journal offering to rentout the former Cabela’s officesfor $1 to a company who couldcome to Sidney and hire theworkers it had laid off.

A spokesman said Bass Prohas had promising conversa-tions with potential renters.

Melissa Norgard, director ofeconomic development in Sid-ney, said the town’s challengeis to get other employers mov-ing to snap up the laid-off tal-ent and keep them local. “Theproblem is some people andcompanies just can’t move fastenough,” she said.

In Milwaukee, a workforce

development group called Em-ploy Milwaukee set up an on-site job fair in May with fourdays’ notice for workers laidoff from the corporate officesof department-store chainBon-Ton Stores Inc.

Even with the short notice,12 local employers showed upfrom industries like manufac-turing, finance and healthcare.

Unemployment in the Mil-waukee region was 2.8% inMay. The city’s working-agepopulation has declined 4%since 2010, according to themost recent census data.

BY SHAYNDI RAICE

Midwest Rushes to Keep Laid-Off Workers

With unemployment at historically low levels, the overall pool of available workers remains small. Above, a job fair in Milwaukee.

ROBHART

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The trial will delveinto Paul Manafort’sfinances largelybefore the campaign.

TrumpAlliesTakeAimatCohenAfterFallout

Michael Cohenjoined theTrumpOrganizationas a lawyer in2006.

THEWALL STREET JOURNAL. Monday, July 30, 2018 | A7

been hesitant to close downthe checkpoints because theyproject a message that thegovernment, not the Taliban,is in control.

U.S. and Afghan officialshope to capitalize on the re-cent cease-fire by reaching adeal with the Taliban for asecond truce next month dur-ing the most important Mus-lim holiday of the year.

A new cease-fire, perhapscombined with an agreementby the Afghan government torelease Taliban prisoners,could create new momentumfor substantive peace talks.

Reaching that point won’tbe easy. The U.S. and Afghani-stan have repeatedly tried andfailed to jump-start negotia-tions with the Taliban. One ofthe most serious efforts camein 2013, when Washington andKabul paved the way for theTaliban to open a political of-fice in Doha, Qatar. But theinitiative fell apart in whatseemed like a minor disputeover a sign at the office andwhat kind of flag the Talibanraised outside.

U.S. and Afghan officials

WORLD NEWS

say the Taliban are showing anew willingness to talk, some-thing they credit to Mr.Trump’s decision to send moretroops to Afghanistan, with anopen-ended commitment toprevent the Taliban from re-capturing power in Kabul.

American officials are try-ing to test the Taliban’s sin-cerity. The top U.S. diplomatfor South Asia met Taliban po-litical leaders in Qatar in aneffort to lay the groundworkfor peace talks. The optimismabout potential talks is tem-pered by a recognition thatany number of unexpected de-velopments could quickly de-rail any proposed talks.

And Gen. Votel got a senseof other challenges facing Af-ghanistan during his visit. Afew hours before he landed inKabul, a suicide bomber killedat least 20 people at the air-port entrance in an attack ap-parently aimed at one of thecountry’s most polarizing po-litical leaders, Vice PresidentAbdul Rashid Dostum.

In western Afghanistan, lo-cal officials warned the Ameri-can commander that the Tali-ban were making gains withthe help of neighboring Iran.U.S. officials in southern Af-ghanistan said they neededmore time to prop up an Af-ghan military capable of se-curing the country withoutAmerican help. North AtlanticTreaty Organization allies inthe north warned that internalAfghan political divisionsposed as big a risk to stabilityas the Taliban.

The state of play, he said,still leaves him feeling “cau-tiously optimistic.”

Afghan forces in the tough-est areas of southern Afghani-stan appeared to be pushingthe Taliban back, Gen. Votelsaid. Effective Taliban attackshave dropped, according tothe Pentagon.

“We’re seeing some thingsthat are moving in the right di-rection,” he said. “The cautiouspart of cautious optimism isthere’s still a lot left to do.”

KANDAHAR, Afghanistan—By most objective measures,President Trump’s year-oldstrategy for ending the war inAfghanistan has produced fewpositive results.

Afghanistan’s beleagueredsoldiers have failed to recap-ture significant new groundfrom the Taliban. Civiliandeaths have hit historic highs.The Afghan military is strug-gling to build a reliable airforce and expand the numberof elite fighters.

Efforts to cripple lucrativeinsurgent drug-smuggling op-erations have fallen short ofexpectations. And U.S. intelli-gence officials say the presi-dent’s strategy has halted Tali-ban gains but not reversedtheir momentum, according topeople familiar with the latestassessments.

American officials say,though, that the hard numbersdon’t tell the full story: After17 years of fighting, a windowof opportunity has opened forhistoric peace talks that couldbring the war to an end.

Top U.S. and Afghan offi-cials don’t focus solely on thegrim statistics, but also on themore implicit signs of opti-mism—especially what theyconsider a surprising three-day cease-fire last month,when Taliban fighters tookselfie photos with Afghan sol-diers across the country.

“I believe our assessmenthas to account for both an ob-jective and subjective evalua-tion of the situation,” saidGen. Joseph Votel, who over-sees the war in Afghanistan ashead of U.S. Central Command.“If we only focus on objectiveaspects, you will miss some-thing. There is something tothe fact that people are tired

BY DION NISSENBAUM

In Afghanistan, U.S. Sees Signs of PeaceU.S. officials, hoping tocapitalize on cease-fire,say hard numbersdon’t tell the full story

In Afghanistan, civilian deaths have hit historic highs. Above, people gathered at the site of a suicide attack in Kabul last week.

RAHMATALIZADAH/X

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and saw something in thecease-fire that got them ex-cited.”

After a three-day visit toAfghanistan, Gen. Votel saidthat the pillars of Mr. Trump’sSouth Asia strategy are sound,

but that he wants to make afew changes as the U.S. triesto gain more traction.

One thing Gen. Votel andAfghan security officials arelooking at doing is closingsome of the more remote

checkpoints that have becomeeasy targets for Taliban fight-ers. U.S. military leaders haveencouraged their Afghan coun-terparts to remove some ofthem to reduce the vulnerabil-ities, but Afghan officials have

*Includes numbers of sorties (not strikes) and munitions expended by manned and remotely-piloted aircraftSources: United States Air Forces Central Command; United Nations Assistance Mission in Afghanistan; FDD's Long War Journal

THEWALL STREET JOURNAL.

Halting ProgressAirstrikes by the U.S.-led coalition are up in Afghanistan, as are civilian fatalities. But progress has beenslow in wresting land from the Taliban.

4

0

1

2

3

thousand

’08 ’10 ’12 ’14 ’16 ’18

January through JuneJuly through December

6

0

2

4

thousand

’10 ’12 ’14 ’16 ’18

January through JuneJuly through December 400

0

100

200

300

January June

Government orundetermined

Contested

UnconfirmableTaliban claim

Taliban

Number of Afghan districtscontrolled by each faction, 2018

Weapons released by aircraftunder allied control*

Civilian deaths

Machine data could drive your business. It holds the key to happy customers,problem-free IT and headline-free cybersecurity. Let Splunk turn your machine datainto answers - like we do for more than 15,000 customers around the world.See how: splunk.com/get-value

© 2018 Splunk Inc.

A PETABYTEOF DATA IS ATERRIBLE THINGTOWASTE.

A8 | Monday, July 30, 2018 THEWALL STREET JOURNAL.

WORLD NEWS

Whether Monday’s election in Zimbabwe will be spared violence that marred previous polls has become the central question of this vote.

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likely to make the decisionabout whether Mr. Moonvesshould step aside pending theinvestigation, the people said.

Supporters and detractorsof Mr. Moonves began toweigh in over the weekend. OnSunday, Zephyr Teachout, acandidate for New York attor-

ney general, tweeted, “CBSmust suspend Moonves pend-ing investigation so there’s nofear among employees aboutretaliation.”

Meanwhile, Bucknell Uni-versity, Mr. Moonves’s almamater, scrubbed its website ofcontent about Mr. Moonves,

women uncomfortable but de-nied that he retaliated byharming anyone’s career afterbeing rebuffed.

The pressure on Mr.Moonves comes as he and CBSare in a legal battle with con-trolling shareholder NationalAmusements Inc. and its presi-dent, Shari Redstone, over herdesire to recombine CBS withits sister company Viacom Inc.

If Mr. Moonves didn’t sur-vive the crisis, it could in-crease the chances of amerger, since his opposition tothe management team of theproposed combined firmhelped derail the talks, accord-ing to a close observer of the

ContinuedfromPageOne

them a better education andwho are consequently morewilling to defend themselves.

Mr. Lei admitted to sexuallyassaulting the woman whomade the initial allegation,apologized and said he wouldstep down from his post. Hedidn’t respond to requests forcomment about Ms. Xiao’s al-legations. His charity, in astatement, said it was going to

train staff in sexual awarenessand also release guidelines onsexual harassment.

Mao Zedong famously pro-claimed that women “hold uphalf the sky.” But they remainunderrepresented in businessand politics: China ranks 100out of 144 countries for gen-der equality, according to theWorld Economic Forum.

Women who report sexual

misconduct face risks includ-ing public shaming, politicalpressure and censorship, ac-tivists say—one reason themovement hasn’t taken holdas quickly as it did in the U.S.and other countries.

While China has formallaws to protect victims of sex-ual assault, lawyer Lv Xiao-quan, director of Beijing Qian-qian Law Firm, which provides

on Mr. Chamisa’s side in theHarare East district, where Mr.Namagowa lives. “They don’thave the ability to hold a freeand fair election.”

The United Nations’ human-rights office warned last weekof rising reports of voter intim-idation, including people beingforced to attend political ral-lies, and threats of violence.Opposition and civil-societygroups, meanwhile, have com-plained about irregularities inthe voters’ roll, a lack of trans-parency about the printing andstorage of ballot papers andthe electoral commission’s re-fusal to disclose results foreach polling station.

An independent audit of theroll, which signed up 79% of eli-gible voters, turned up almost1,000 people aged 100 andolder—in a country with an av-erage life expectancy of 61—in-cluding four born in the 1800s,and nearly 5,000 apparent du-plicates. More than 100,000 ofthe 5.6 million voters registeredhad different birth dates or sur-names than recorded in 2013.

The irregularities have

ratcheted up tensions in atightening race.

With one in five likely vot-ers either still undecided orunwilling to disclose theirpick, the pollsters estimatethat a first-round oppositionvictory is possible. If neithercandidate wins more than 50%of the vote, a runoff will beheld in September.

“If Chamisa gets into powerwe’ll be liberated and we’ll getjobs,” said Kenneth Jenyura,20, who also lives in HarareEast. But like many young ur-ban Zimbabweans, who aremore likely to be MDC sup-porters, Mr. Jenyura didn’tregister to vote, saying hecouldn’t pay the fees for anidentification card.

Local election watchdogshave said vote-buying is a risk,including through food handedout at ZANU-PF rallies in ruralareas. But Mr. Namagowa saidhe doesn’t believe that strategywill work this time. “They’lltake the bread and then theywill vote for whom they want.”

—Bernard Mpofucontributed to this article.

40% for Mr. Mnangagwa. Thatis up from just 31% for Mr.Chamisa two months earlier,while support for Mr. Mnan-gagwa declined from 42%.

What stands between thecandidates and their pledges isa positive assessment of theelection from international ob-servers, including from theEuropean Union and the U.S.Foreign governments havemade a credible vote the cen-tral condition for consideringaid, including a bailout fromthe International MonetaryFund, and easing sanctions.

In his first intervention inthe election campaign, Mr.Mugabe on Sunday said hewould cast his ballot for theopposition. “I cannot vote forthose who have tormentedme,” said the 94-year-old,slouched behind a pile of mi-crophones, at his home on theoutskirts of the capital Harare.

Although Mr. Mugabe de-clined to say which candidatehe would vote for, he singledout Mr. Chamisa, who at 40 isthe youngest-ever contenderfor Zimbabwe’s presidency.“He seems to be doing well,”Mr. Mugabe said.

A win for the oppositionwould deliver a shock to acountry that has been ruled bythe same party since the endof white-minority rule in 1980,even more so than the militaryintervention that removed Mr.Mugabe, and installed Mr.Mnangagwa, in November. ButMr. Chamisa and the MDCwould have to wrangle with aninefficient government appa-ratus formed by its ZANU-PFopponents.

Despite a commitment byMr. Mnangagwa to hold demo-

HARARE, Zimbabwe—Zim-babweans vote for the firsttime since the ouster of long-time strongman RobertMugabe. Some are wondering iftheir vote will count.

“People in Zimbabwe, thereare some who still don’t thinkthat a vote is a voice,” saidNewton Namagowa, a 35-year-old who lives in a gritty easterncorner of the capital and hasbeen unemployed since the vio-lent expulsion of white farmersturned his country into an in-ternational pariah in the early2000s. “We want a new sys-tem.”

Whether Monday’s electionwill be spared the violenceand alleged rigging thatmarred previous polls has be-come the central question ofthis vote, in which both maincandidates have vowed tooverturn Mr. Mugabe’s legacyof economic collapse and po-litical repression.

President Emmerson Mnan-gagwa, Mr. Mugabe’s right-hand man for four decades,and his main rival, NelsonChamisa, a pastor and lawyer,have both pledged to fightcorruption, bring in foreign in-vestment and create jobs.

In an opinion poll con-ducted this month by the non-partisan Afrobarometer group,37% of likely voters said theywould cast their ballots forMr. Chamisa, compared with

BY GABRIELE STEINHAUSER

Zimbabwe’sVote CloudedBy DoubtsOn eve of election,former leader Mugabethrows supportbehind opposition

cratic elections and accept anopposition victory, many Zim-babweans are skeptical that hisparty can ditch old habits.

“ZANU-PF’s DNA is stealing.

That’s all they know,” said Ten-dai Biti, who was Zimbabwe’sfinance minister in a govern-ment of national unity between2009 and 2013 and is running

*Among likely and registered votersSource: Afrobarometer Surveys, most recent of 2,400 adults conducted June 25-July 6;margin of error: +/- 2 percentage points

THEWALL STREET JOURNAL.

Tight RacePolls show challenger Nelson Chamisa gaining on PresidentEmmerson Mnangagwa ahead of Zimbabwe's elections Monday...

...But many worry the results will be marred by fraud.

May*

Dateof poll

July*

42% 31%

40% 37%

Mnangagwa Chamisa

Share of respondents who believe...

Incorrectresults will beannounced

Security agencieswon't acceptresult

Powerful peoplewill find out howthey voted

Their vote won'tbe counted

LikelyNot likely

Don’t know

45%

9

46 44%

9

47 28%

6

66 26%

8

66

BEIJING—A slew of sexual-misconduct allegations is sur-facing in China, a sign of pent-up frustration about thetreatment of women and a tes-tament to the rise of a genera-tion increasingly willing tospeak up.

Allegations in China havelargely centered on universi-ties, but the emerging #MeToomovement appears to bespreading. In recent days,some two dozen women havestepped forward on social me-dia, mostly anonymously, tomake sexual-misconduct alle-gations against men, includinga well-known charity leaderand a host on China’s powerfulstate broadcaster.

The wave began when awoman accused Lei Chuang,the head of a Chinese charityfighting hepatitis B discrimi-nation, on social media of sex-ual assault. Reports of sexualmisconduct against other menfollowed.

“Our generation is quiteunique. We are the product ofthe one-child policy,” said XiaoYue, a 28-year-old entrepreneurwho also took to social media toshare interactions with Mr. Leithat had made her uncomfort-able. Ms. Xiao suggested thatChina’s one-child policy createda generation of only childrenwhose parents were able to give

legal aid to women and chil-dren, said victims face barri-ers that include difficultiesproving alleged crimes, as wellas a lack of a clear legal defi-nition for what constitutessexual harassment.

Among #MeToo universitycases so far, one former stu-dent has sued a university of-ficial for sexual assault. Thecase, filed earlier this year,has yet to be resolved.

After the initial allegationagainst Mr. Lei, other accusa-tions followed, includingagainst Zhang Wen, a maga-zine columnist. A woman ac-cused him on social media ofraping her while she wasdrunk. Several other women,including writer Jiang Fang-zhou, subsequently said Mr.Zhang had harassed them.

Mr. Zhang said in a state-ment that what had happenedbetween him and the womanaccusing him of rape was con-sensual. In response to the ha-rassment claims, he posted aletter on Jinri Toutiao, a Chi-nese social media site, saying,“It’s very natural for men andwomen to have intimate physi-cal contact such as cuddlingand kissing after drink.” At-tempts to reach him for furthercomment weren’t successful.

Allegations also surfacedagainst Zhu Jun, a presenter

on China Central Televisionwho had for decades hostedthe country’s annual SpringFestival Gala, China’s most-watched show. On Thursday, anintern who had worked for hisshow in Beijing posted on so-cial media that she had re-ported him to police after heattempted to grope her butthat they had pressured her towithdraw her report, citing his“positive influence” on society.Beijing police declined to com-ment, and CCTV didn’t respondto a request for comment.

Mr. Zhu didn’t respond torequests for comment.

Writer Chun Shu says #Me-Too cases face particular hur-dles in China. “There are somany reasons to not speakout,” she said, citing damagedself-esteem and fear of publichumiliation. “A number offriends have told me they’vebeen raped, and the reasonthey don’t say anything is be-cause the price would be toogreat—they don’t want to behurt yet again,” she said.

While awareness aboutwomen’s rights in China lags, itis improving, said Zheng Xi, aZhejiang University student ac-tive in fighting campus sexual-harassment issues.

—Te-Ping Chen in Beijingand Chunying Zhang in

Shanghai

The #MeToo Movement Gathers Momentum in China

Some two dozen women have made sexual-misconduct allegations on social media in recent days.

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Redstone media empire.The board has been divided

in recent months, with a hand-ful of directors backing Ms.Redstone and a larger numberloyal to Mr. Moonves andmanagement. It is unclear ifthe New Yorker revelationswill change those dynamics.

Board members differ onthe question of whether Mr.Moonves needs to step asidepending the investigation, thepeople familiar with the mat-ter said. On Friday, a state-ment from independent direc-tors expressed full support ofCBS’s current managementteam, as they called for an in-vestigation.

Mr. Moonves serves as ex-ecutive chairman of the board,as well as chief executive.

The special committee isexpected to select a law firmto conduct the investigationby the middle of this week, thepeople said. A list of potentialfirms has already been drawnup. That committee is also

telling WNEP-TV, “Bucknellwill not stand for sexual mis-conduct—on campus or be-yond. In light of the allega-tions against Mr. Moonves, weremoved him from certainpages of our website that cele-brate his relationship with theUniversity, and we are evaluat-ing any additional actions thatmay be appropriate.”

Some senior female CBS ex-ecutives who have workedwith him publicly voiced theirsupport for Mr. Moonves, in-cluding ad sales chief Jo AnnRoss and programming execu-tive Angelica McDaniel.

People familiar with Ms.Redstone’s thinking emphasizethat she has no preconceivedideas about the investigationand wants to let it run itscourse before making any de-cisions.

In May, CBS directorsmoved to weaken NationalAmusements and Ms. Red-stone’s hold on the companyby issuing a dividend that

would reduce National Amuse-ments’ voting stake to about20% from 80%.

National Amusementschanged the CBS bylaws to re-quire approval of a superma-jority of directors for such anaction.

The battle has moved to aDelaware court and is ex-pected to go to trial in the fall.

Some media executives be-lieve that, if the investigationverifies the allegations out-lined in the New Yorker arti-cle, it will increase the likeli-hood of a settlement in thelitigation.

That, in turn, could increasethe likelihood of a merger be-tween CBS and Viacom, someanalysts and media executivessaid.

CBS and Viacom were inmerger talks earlier this year,going so far as to agree on aprice, pending the resolutionof management issues, includ-ing who would be Mr.Moonves’s successor.

DirectorsWeigh CBSCEO’s Fate

Leslie Moonves is executive chairman of CBS’s board, as well as CEO.

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WORLD NEWS

string of missile and nucleartests that included the country’sfirst intercontinental ballisticmissiles capable of reaching theU.S. mainland, Mr. Kim said hewas ready to dismantle his nu-clear test site and shift his at-tention entirely to the economy.

In the absence of overhaulsto allow for more private en-terprise, it is too soon to say ifMr. Kim’s initiatives on theeconomic front will prove morethan cosmetic, said Kevin Gray,a professor in international re-lations at the U.K.’s Universityof Sussex.

In addition, North Korea hasyet to show it is abandoningits nuclear program. Satelliteimagery has indicated Pyong-yang has started dismantling arocket-launch site but is ex-panding facilities tied to itsnuclear and missile programs.

Mr. Kim’s apparent emphasison his economy could also indi-cate concern about the effect ofsanctions since the United Na-tions tightened the screws lastyear in response to nuclear andmissile tests. South Korea’scentral bank estimates that theNorth’s economy contracted by3.5% last year, the biggest an-nual drop in two decades.

During one recent tour, Mr.Kim berated local cadres on theshortcomings of their facilities.“The pictures accompanyingthe reports of the visit showeda visibly angry leader withtight-lipped officials trailingbehind, walking in a dingyplant over a filthy floor amidstancient and seemingly nonfunc-tional machinery,” Mr. Carlinsaid. “Not the normal picture.”

—Yun-hwan Chaecontributed to this article.

WORLDWATCH

GREECE

Mourning BeginsAs Fire’s Toll Tops 90

Greece began to bury the vic-tims of the wildfires that ragedthrough a crowded resort area, asthe death toll continued to rise.

A fire brigade official said onSunday that the official numberof fatalities rose to 91, while 25people were missing.

On Sunday, hundreds at-tended a memorial service inthe destroyed seaside resort ofMati to mourn the loss of theirfriends and neighbors.

—Nektaria Stamouli

INDONESIA

Strong EarthquakeStrikes Resort Isle

A strong, shallow earthquakekilled at least 14 people on Indo-nesia’s Lombok island, a populartourist destination next to Bali.

Officials say more than 160people were injured and morethan 1,000 houses damaged.

Hundreds of tourists were be-ing evacuated from aroundMount Rinjani, an active volcanoon Lombok. The quake was felton Bali, but no damage or casu-alties were reported there.

—Associated Press

WEST BANK

Teen Who SlappedIsraeli Soldier Freed

A Palestinian teenager jailedfor slapping two Israeli soldierswas released by Israel on Sun-day after completing her eight-month term, and said she wantsto study law so she can defendpeople living under occupation inthe West Bank.

Ahed Tamimi, 17 years old,became a symbol of resistanceafter the incident last Decemberoutside her home in Nabi Saleh,a village that has for years cam-paigned against land seizures byIsrael, leading to confrontationswith the Israeli military and Jew-ish settlers.

Many Israelis regarded the in-cident, which Ms. Tamimi’smother relayed live on Facebook,as a staged provocation.

—WSJ Roundup

in 2013, but this was beingtaken as a sign of intimidationin some quarters.

Phil Robertson, deputy di-rector of the Asia division ofHuman Rights Watch, said thepractice of dipping voters’ in-dex fingers in indelible ink—apractice initially introducedto prevent people votingtwice—had evolved into a wayof determining who hadheeded Mr. Hun Sen’s call tocome out and vote.

One man, who asked not tobe identified, said he votedsimply to get his finger stained.“I have a business permit to re-new next week,” he said.

Still, there are growingquestions over the 65-year-oldstrongman’s durability.

Mr. Hun Sen’s main claim topower has long been hispledge to prevent Cambodiafalling back into the chaos ofthe Khmer Rouge years. ManyCambodians happily supporthim. The country is now oneof the world’s fastest-growingeconomies, growing at 7%-plusover the past several years.

But Mr. Hun Sen’s appeal isstrongest with those who re-member the horrors of PolPot’s killing fields. Lao MongHay, a political commentator,notes that two-thirds of thecountry’s 16 million people areunder 30 and are more inter-ested in day-to-day issues suchas corruption. In recent years

they increasingly turned to Mr.Sokha’s now-banned CambodiaNational Rescue Party, whichwon 44% of the vote in lastyear’s local elections.

People familiar with Mr.Hun Sen’s thinking say he isacutely aware of the longer-term threat the changing de-mographics pose.

His main concern, one said,is meeting the same fate as for-mer Serbian leader SlobodanMilosevic, who was toppled ina popular revolt and died whileon trial for human-rightsabuses at the InternationalCriminal Court at The Hague.

To reinforce his hand andkeep the economy growing, Mr.Hun Sen strengthened Cambo-dia’s ties to China after Mr.Sokha was arrested on treasoncharges he disputes and hisparty outlawed. Beijing is by farthe country’s biggest aid donorand investor, spending billionshere over the past decade.

But getting too close toChina poses risks of its own.

In the seaside town of Siha-noukville, a favorite destina-tion for Chinese tourists andinvestors, the local governorrecently wrote a letter to thenational government com-plaining that organized crimegroups from China had enteredthe area, while Chinese-builthotels, casinos and apartmentcomplexes have displaced localCambodian businesses.

Days before Mr. Pompeo’sarrival on July 6, Mr. Kim sur-veyed a chemical-fiber mill, atextile mill and a cosmeticsfactory in Sinuiju, a cityacross the Yalu River fromChina. On July 17, Mr. Kim’stravels took him to the north-east, where he inspected abackpack factory, a stalled ho-tel construction site, a holidaycamp, a coal-mining machinefactory, a shipyard, a powerstation and a fish farm.

And on Thursday, North Ko-rea reported a visit to the eastcoast city of Wonsan, wherehe inspected factories churn-ing out snacks and children’sschool supplies.

According to the report, Mr.Kim called on officials to se-cure stable supplies of canvas,zippers and synthetic leatherto make high-quality back-

packs, urging them to “workheart and soul with devotionto ensure the quality of bagsjust as they would make bagsfor their own children.”

The itinerary indicates anemphasis on encouraging pri-vate consumption, said Benja-min Silberstein, an associatescholar at the Foreign PolicyResearch Institute in Philadel-phia and a co-editor of theNorth Korean Economy Watchwebsite.

It also comes weeks afterMr. Kim toured glitzy sites inSingapore ahead of his meet-ing with President Trump.

Shortly after Mr. Kim cameto power in late 2011, he an-nounced a policy of byungjin,or “dual advance,” which prom-ised his people both nuclearand economic development.

But in April, following a

SEOUL—When Secretary ofState Mike Pompeo arrived inPyongyang this month to dis-cuss North Korea’s nuclearprogram, leader Kim Jong Unwas out of town—visiting apotato farm and factory in thecountry’s impoverished north,according to state media.

Mr. Kim, having declared hisnuclear program complete andclaimed his place on the worldstage next to the U.S. presidentat a Singapore summit, has be-gun to lavish attention on thelivelihood of his people.

In an abrupt shift followingmonths of visits to military-re-lated sites, Mr. Kim has madea series of publicized trips toremote factories and farmsand other symbols of the dailywelfare of his people.

The visits appear to reflecthis stated new focus on eco-nomic development, as sanc-tions weigh on his country andstate control over economicactivity erodes, North Koreaexperts said.

“Now it’s everything for theeconomy,” said Robert Carlin,a former U.S. intelligence offi-cial and a visiting scholar atStanford University.

Like his father and grandfa-ther, Mr. Kim has made a habitof “on-the-spot guidance” visits,in which he dispenses advice tocadres while highlighting hisattentiveness to local needs. Hehas visited factories and food-production facilities, but untilnow almost all have been in oraround Pyongyang, many ofthem tied to the military.

That has changed with hispublicized visits to the poorer,underdeveloped areas outsidethe capital, say those whostudy the North Korean leader.

“Going into the sticks wherehe’s gone, this is the first time,”said Michael Madden, a U.S.-based North Korea expert.

BY JONATHAN CHENG

KimTurns Attention to Rural PoorLeader travels toremote factories andfarms, symbols ofpeople’s daily welfare

North Korean leader Kim Jong Un inspected a farm in the country’s northern Mount Paektu region in this state media photo.

KCN

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PHNOM PENH, Cambodia—After locking up his chief rival,Prime Minister Hun Senclaimed another five years asCambodia’s leader.

Sunday’s election waswidely derided as a farce ex-posing the lurch toward au-thoritarianism taking root inmany smaller countriesaround Asia and Africa.

China notably stepped inwith $20 million to pay forvoting booths and other pollingequipment when the U.S. andEuropean Union pulled out inprotest at last year’s arrest ofopposition leader Kem Sokha.

A smattering of far-rightparties ranging from Britain’sUK Independence Party togroups from Austria, the CzechRepublic and Italy served aselection observers.

Mr. Hun Sen’s critics in-stead focused their energy onconvincing Cambodians to stayaway from the polls ratherthan vote for 19 smaller oppo-sition parties on the ballot,few of which existed until afew months earlier.

But as vote counting con-tinued, Mr. Hun Sen, a formerKhmer Rouge defector whowas installed as premier byVietnamese forces 33 yearsago, claimed victory in a poston his Facebook page.

“Compatriots have chosenthe democratic path and usedtheir rights,” he said. Hisparty spokesman Sok Eysanlater said his Cambodian Peo-ple’s party had won at least100 seats in the 125-seat par-liament, up from 68 previ-ously. Official results are ex-pected to emerge later.

Election officials said thevoter turnout was 82%, higherthan the last national elections

BY JAMES HOOKWAY

Cambodian StrongmanClaims New 5-Year Term

Cambodia’s Prime Minister Hun Sen prepared to cast his vote inPhnom Penh on Sunday in an election widely derided as a farce.

MANANVATS

YAYA

NA/A

GENCE

FRANCE

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Still, there aregrowing questionsover the 65-year-oldHun Sen’s durability.

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A10 | Monday, July 30, 2018 THEWALL STREET JOURNAL.

cate how much change thecountry’s regulators will toleratebefore stepping in to protect in-cumbents.

In recent months, fintechstartups backed by Chinese in-ternet companies such as e-commerce platform JD.com andsearch engine Baidu Inc. havepledged to move away from di-rectly offering financial servicesand toward providing platformsfor traditional institutions touse.

Ant is doing the same. It saysit wants to be known not as a fi-nancial conglomerate but as atechnology provider or “lifestyleplatform,” with future profitscoming mainly from fees frominstitutions using its technology.

Consumers such as ElaineWang show Ant’s power. The30-year-old Shanghai marketingmanager transfers about a thirdof her salary from her ChinaMerchants Bank account intoAnt’s investment products and

uses Alipay several times dailyfor simple transactions such asbuying coffee.

More than 620 million peopleuse Alipay, a person familiarwith the number said. Once peo-ple’s money moves from con-ventional bank accounts intotheir virtual wallets, much of itdoesn’t return.

In Hangzhou, Ant occupies aglass-walled, Z-shaped complexdesigned by the firm behindAmazon.com’s new Seattle of-fices. Employees are greeted bya tall red sculpture of a nakedman bent down looking at theground.

Digital cameras scan manyemployees’ faces as they enter.Meeting-room booking rules sayanyone can take over a space ifusers don’t show up within aminute of their allotted times.

Virtually everyone in thecompany uses an alias, a tradi-tion inherited from AlibabaGroup Holding Ltd., the e-com-merce goliath from which Antemerged.

Many names are inspired bykung fu novels, which Alibaba’sMr. Ma likes, and reinforce ageneral absence of hierarchy.Some employees don’t knowcolleagues’ real names. They aretold they can pick aliases be-cause they couldn’t choose theirnames at birth.

Mr. Huang, the former Antexecutive, recalls a companywhere the average age was un-der 27 and some employees hadworked at Mastercard, PayPaland foreign banks. “It was aplace full of young, idealistic fi-nancial elites, many of whomhad studied abroad,” he said.

Ant’s roots trace to 2004,when Alibaba created Alipay tosmooth online shopping. Ali-baba has a popular eBay-likeservice called Taobao that con-nects buyers with third-partysellers. It needed a secure andreliable way to send payments.

Mr. Ma wasn’t bothered thatChina didn’t have a regulatorystructure for a nonbank pay-ment company. “If someoneneeds to go to jail for this prod-uct, I will go,” he told col-leagues, alluding to the legalgray area. Mr. Ma couldn’t bereached for comment.

As Alipay grew, its executivesrealized they could push the fi-nancial system to change. Mr.Ma said in December 2008 thatChina’s banks weren’t doingenough to support small busi-nesses. Large banks did much oftheir work with state-owned en-terprises, ignoring small firmsthat could use more capital.

“If the banks do not change,

than those banks could tap.Industrial and Commercial

Bank of China, the country’s big-gest bank by assets, respondedto the instant popularity of themoney-market fund by sharplyreducing the amount Alipay us-ers could withdraw in a singletransaction. Other banks alsotightened limits.

Yu’e Bao was a blow to banksbecause it sucked money fromsavings accounts, said MaWeihua, then-chairman of WingLung Bank, in 2014. Some banksissued commercial paper to Yu’eBao, incurring higher costs offunding.

By then, Jack Ma hadstepped down as Alibaba’s chiefexecutive (remaining chair-man), and in 2014 Alipay re-branded itself as Ant. Executivesoutlined plans to expand intopersonal loans, small-businesslending, credit scoring and in-surance. The company wouldtake advantage of China’s rapidadoption of smartphones.

Then came the backlash. Lastsummer, the company kicked offa campaign in the city of Wuhanto promote a “cashless society.”It offered Alipay users rebatesencouraging them to pay instores with mobile phones.

Days before the officiallaunch, Ant refashioned thecampaign after officials from alocal office of China’s centralbank asked it to remove theword “cashless” and told storeowners not to reject cash, ac-cording to the state-owned Peo-ple’s Daily newspaper. The cen-tral bank later denied havingissued the order, according toanother state-owned news ser-vice. The bank didn’t respond torequests to clarify its position.

In September, Chinese secu-rities regulators said thatsome large money-marketfunds were “systemically sig-nificant.” Without naming Yu’eBao, regulators issued rulesrequiring large money fundsto reduce holdings of theirhard-to-sell assets. Ant’s as-set-management unit an-nounced measures to limit in-flows into Yu’e Bao andcommitted to paring its hold-ings of longer-term and riskiersecurities.

Striking a blowA few months later, China’s

central bank struck a blowagainst Ant’s credit-scoring sys-tem, Zhima Credit, known inEnglish as Sesame Credit.

Unlike the U.S., China haslong lacked comprehensive na-tionwide credit-scoring, consid-ered essential to a consumereconomy. In early 2015, the cen-tral bank encouraged Ant andseveral other private companiesto develop their own credit-rat-ing systems.

Ant was quick off the mark,bringing out a system that usesnumerous variables includingpeople’s payment history on Ali-pay.

In the spring of 2017, a Chi-nese central bank official said ata seminar that credit scores cre-ated by private companies were“far below qualification.” Andthis year, the central bank li-censed a new state-owned com-pany, Baihang Credit Scoring, tocreate a nationwide credit-scor-ing system.

Ant’s Mr. Chen said the com-pany now uses its Zhima Creditonly for services such as waiv-ing deposits for bicycle rentalsfor people with high scores.

Recently, the central bank re-quired nonbank payment opera-tors such as Alipay and its chiefrival WeChat Pay, operated byTencent Holdings Ltd., to placeescrow funds in non-interest-bearing bank accounts by early2019, to prevent misuse. Thatmeans they won’t be able to useescrowmoney to generate inter-est gains.

Partly as a result, online-pay-ment services, which provided65% of Ant’s revenue in 2016,are expected to provide lessthan a third of it in 2021, said aperson familiar with the matter.

Some investors in Ant saythey aren’t concerned. Ant isunlike any company in theworld, said Ben Zhou, a manag-ing director at U.S. private eq-uity firm Warburg Pincus. It is“a whole new species.”

IN DEPTH

Growing GiantA look at how China's AntFinancial stacks up against itsglobal peers.

Online payment active users

Yearly paymenttransaction volume

Largest money-marketfund size

Number of peoplewith credit scores

257 million

Ant

Around200 million

FICO

$219 billion

Ant*

$134 billion

JPMorgan†

$8.8 trillion

620 million

Ant

244 million

PayPal

$5.2 trillion

MastercardAnt

Sources: the companies, Morningstar,Analysys, staff reports

THEWALL STREET JOURNAL.

*Tianhong Yu'e Bao Money Market Fund†JPMorgan U.S. Government MoneyMarket FundNote: Active users as of end of 2017 forAnt , 2Q 2018 for PayPal; transactionvolume through end of 2017; fund size asof 2Q 2018; credit scores as of 1Q 2017 forAnt, end of 2016 for FICO.

we will change the banks,” Mr.Ma pledged at an entrepreneur-ship conference that year. AnAlibaba unit later began makingloans to some small businesses.

In 2010, Mr. Ma carved Ali-pay out of Alibaba after authori-ties said the payment operationwould need a new license to op-erate.

By 2013, Alipay was holdingbillions of dollars of customerfunds in escrow, a custodianbank account, for transactionson Taobao. Even then, execu-tives worried banks would seeAlipay as a competitor, recalls aformer employee, as it accumu-lated piles of money and madeplans to offer more financialservices.

Employees came up with theidea of letting customers stashtheir idle Alipay money in anonline money-market fund toearn income. The fund, knownas Yu’e Bao, or “leftover trea-sure,” allows Alipay users to in-vest as little as 0.01 yuan($0.0015) and to transfer cash inand out without fees.

More than a million peopleshifted money into the fundwithin days of its launch in June2013, drawn by yields severalpoints above what banks paidon short-term deposits. Yu’e Baogenerated returns by investingin high-yielding products riskier

For years, authorities‘turned a blind eye’and let Ant get huge,a researcher said.

homes, some of which hold upto 16,000 gallons of water.

It is legal to own sharks,which can cost anywhere froma few hundred to thousands ofdollars, according to Mr.Raymer. Some species, likegreat whites, are protected,and cannot be kept in homes.

Owning a shark can be “apower thing,” said Joe Ca-paratta, owner of ManhattanAquariums and Unique Corals,who has owned catsharksand epaulette sharks in thepast. “The shark is the mostfeared animal in the waters.To have one as a pet kind ofputs you above it.”

Mr. Caparatta said he getsfrequent requests for largesharks such as blacktips, buttries to steer his customers to-

ContinuedfromPageOne

ward smaller species thatare easier to take care of.“These big sharks don’t dowell in captivity,” he said,while smaller species “aremuch better suited to life in aglass box.”

Ario Fakheri, a physicianand real-estate developer,built a home with a shark tankin the Hollywood Hills and isputting a 15,000-gallon sharkpond in the backyard of hisown Los Angeles home. Hecalled sharks “one of the sexi-est animals out there.”

Mr. Fakheri said he hasloved sharks since he was achild, when he loved watchingthe movie “Jaws.” While thatfilm’s murderous great whitedoesn’t seem like an ideal pet,he said the danger adds tosharks’ allure.

“Now you control them,” hesaid. “It’s payback.”

After Ms. Ingram sent thehoundshark back, she turnedthe air conditioner off beforeleaving the house during aheat wave. When she cameback, the leopard shark wasdead. “Apparently sharks don’t

grow to 10 feet,” he said. Theaquarium gets so many callsfrom people whose sharkshave outgrown their tanksthat it can’t take them all. Petsharks, he added, shouldn’t bereleased into the wild.

Monique Samuels installeda 875-gallon tank in herkitchen in Potomac, Md. It’shome to Horney, a horn shark,and a two-foot-long sand sharkshe named the Grande Dame.(She later discovered it’s amale, but said she’s not plan-ning to change the name.)

“They’re my babies,” saidMs. Samuels, who stars in thereality television show, “TheReal Housewives of Potomac.”

The tank, plus the sharksand other fish that live there,cost about $60,000, she said.She had to install a steel sup-port stand in the cabinet thatholds the 9-foot-longtank, which is so heavy it re-quired six people to bring itinside, Ms. Samuels said.

That brings up anotherdownside: the biting.

Feeding times are perilousfor the tank’s other inhabit-

ants. For aesthetic purposes,most people like to have otherspecies in their tanks along-side sharks. Mr. Caparatta, theManhattan Aquariums owner,said “it’s really just a matter oftime before they eat some ofthe other fish…We’ve had ex-pensive fish chomped in half.”

One of the Samuels’ otherfish, a sailfin tang namedStripe, died after being bittenby a shark during a feedingfrenzy. “He got caught right inthe middle,” Ms. Samuelssaid. After the bite, “you couldsee a gash—it was prettygruesome.”

Mr. Caparatta offered ad-vice for keeping other fish inthe tank safe, though his planisn’t exactly foolproof. “Aslong as you keep the sharkswell-fed, there’s a good chancethat they won’t eat their tankmates,” he said.

He had simpler instructionsfor shark owners who “like tohand-feed” the sharks by hold-ing a piece of meat above thewater.

“We recommend usingtongs,” he said.

like hot water,” she said. “Ididn’t know they were thatsensitive to temperature.”

She bought two more leop-ard sharks, which also soondied. When she replaces them,she said she plans to install abetter temperature controlsystem for the tank.

Stories like this one are ex-actly why shark ownershipshould be undertaken withgreat caution, experts say.

“In general, I would saydon’t get a shark as a pet,”

said Joe Yaiullo, curator andco-founder of Long IslandAquarium. But for those deter-mined to own a shark, he rec-ommended the smaller, bot-tom-dwelling species, likebamboo sharks or catsharks,and researching them in ad-vance to make sure the tank islarge enough to accommodatethem throughout their lives.

With a nurse shark, for ex-ample, “you can buy it at 12inches long and not know thatit’s going to live 40 years and

Monique Samuels with the shark tank in her Potomac, Md., home.

CHRIS

SAMUELS

lier this year, China’s centralbank undermined a years-longeffort by Ant to build a nationalcredit-scoring system. The bankeffectively prevented Ant’s sys-tem from being used by institu-tions making loans.

Regulators have issued rulesrequiring large money-marketfunds to sharply reduce hold-ings of assets that allow them topay high interest rates. Theyhave pressured Ant to slow in-flows into its giant money fund.

The authorities are alsoweighing whether to designateAnt a financial holding companyand require it to meet bank-style capital requirements, peo-ple familiar with the matter say.That would likely affect its prof-its, which last year came to $2billion, pretax, on roughly $10billion in revenue.

Spellbound investorsInvestors remain spellbound,

rewarding privately held Ant inJune with a $150 billion valua-tion on paper, more than twiceits valuation in a 2016 fundinground and above that of Gold-man Sachs Group Inc.

For years, Chinese authori-ties “turned a blind eye andlet them grow as large as theycould,” said Zhu Ning, deputydirector of the National Insti-tute of Financial Research atTsinghua University, who sayshe has talked with regulatorsabout risks to the financialsystem posed by Ant. “It issimply incredible that such agigantic financial institutionhas slipped away from a com-prehensive regulatory frame-work,” Mr. Zhu said.

The vice governor of China’scentral bank, without specifyinga company, recently warnedthat some influential paymentinstitutions shouldn’t think ofthemselves as “too big to beregulated.” The central bankdidn’t respond to requests forcomment.

Ant executives reject the no-tion their company is acting likea bank without oversight. Theysay they are simply bringing fi-nancial services to people thebanks have ignored.

They note Ant doesn’t fundmost of the loans it originatesfrom its balance sheet. Instead,it largely serves as a platformthat makes it easier for banksand others to extend loans andhelps them lower risks.

“I don’t think banks see us asa disrupter,” said Leiming Chen,Ant’s general counsel. “We com-plement them and are helpingthem reach more customers.”

Chinese regulators, he said,“understand what we are doingand they are supportive of ourefforts.”

Ant is expanding its pres-ence overseas by getting moreretailers to accept payments us-ing its online payments service,Alipay, but has struggled toreplicate its China business suc-cess. Early this year, Ant calledoff a takeover of U.S. money-transfer firm MoneyGram Inter-national after an American na-tional-security panel refused toapprove the acquisition.

Increased oversightIn China, increased oversight

of Ant and its competitors couldhold back a golden age of finan-cial-technology growth and indi-

ContinuedfromPageOne

Jack MaRattlesBanks

SharksInvadePosh Homes

The Hangzhou, China, headquarters of Ant Financial Services Group, founded by Chinese billionaire Jack Ma, below.

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THEWALL STREET JOURNAL. * * Monday, July 30, 2018 | A10A

BY LESLIE BRODY

StudentTest ScoreDelay IsParentalHeadache

BY LARA KORTE

The chalkboard outside Me-rakia in New York City’s Flat-iron District displayed acheery “Welcome back!” mes-sage meant to reassure cus-tomers that the restaurant wasopen, even though the streetwas still clogged with sidewalkbarriers, construction crewsand debris-filled dumpsters.

The restaurant was forcedto close, and its air-condition-ing was shut off, for five daysafter a July 19 steam-pipe ex-plosion forced the evacuationof 49 buildings in the area.Owner Renée Typaldos, whoopened Merakia in September,said she is still tallying thefigures for an insurance claimbut estimates that the restau-

New York parents anxiousto see their children’s scoreson last spring’s state tests willhave to wait until at least mid-to-late September this year:The state says it will releasescores about a month laterthan usual due to a technicalreview.

The delay has caused an ex-tra headache in New York City,where many families use testscores to decide which schoolsto explore as they tackle a com-plex process of competing forseats in selective public op-tions. Nearly a third of citypublic schools screen applicantsfor admission, and students’most recent scores often play akey role in ranking candidates,along with course grades, at-tendance and other factors.

Rachel Glube has onedaughter eager to see herfourth-grade scores for apply-ing to middle school for Sep-tember 2019, and anotherdaughter who wants to see herseventh-grade scores for ap-plying to high school. Applica-tions are due Dec. 3 for entry

about a year from now.“You can guess how your

child performed based on pre-vious years but you reallydon’t know,” Ms. Glube said.“It’s stressful enough for thekids and the state isn’t makingit easier.”

A state Education Depart-ment spokesman said theagency would send scores todistricts in mid-to-late Sep-tember. A New York City De-partment of Education spokes-man said his agency usuallyreleased scores to parentswithin a week of getting them.

The state official said itsdelay stemmed from the Boardof Regents’ decision to shortentests for grades three througheight, in English language artsand math, to two days in eachsubject last spring, down fromthree. He said educators mustreview the difficulty of thequestions to determine whereto set the score cutoffs thatsignify performance levels,such as below expectations,proficient and excellent.

Elissa Stein, who runs HighSchool 411, a business thathelps city families navigatethe system, said school tourschedules are already beingposted and will ramp up inAugust. Selective schools postthe typical test scores of stu-dents they enroll.

“Parents now have to signup for tours not knowing iftheir kids meet the schools’admissions rubrics,” she said.“That’s adding to an alreadystressful process and will leadto lots of confusion and disap-pointment.”

New York City has devel-oped a complex public systemthat lets students compete fortheir top choices, partly as away to keep higher-incomefamilies enrolled by offeringthe prospect of admission tohigh-performing schools. Ev-ery year, schools rank appli-cants and students rank theirpreferred schools, and the cityDepartment of Education an-nounces matches in April.

Chancellor Richard Car-ranza has questioned the ra-tionale for screening studentsby ability to this extent, say-ing it was antithetical to apublic system and can exacer-bate segregation, but so farhasn’t announced changes.

A city Department of Edu-cation official said schoolcounselors and the agency areworking with familiesthroughout the summer tohelp them through the admis-sions process.

‘It’s stressful enoughfor the kids and thestate isn’t makingit easier.’

A new set of wheels will rollinto Brooklyn this week, mar-rying the spirit of “Easy Rider”with the practicality of ridesharing.

On Monday, startup com-pany Revel Transit plans to de-ploy 68 electric mopeds in theneighborhoods of Greenpoint,Williamsburg and Bushwickthat people can rent throughan app. If all goes well, the firmexpects to expand to the rest ofthe city in the coming years.

Revel founders Frank Reigand Paul Suhey said mopedsare the “missing link” for NewYork City transportation.

“People in our generationaren’t going to the car dealer-ship and dropping $35,000 justto buy their own car,” said Mr.Reig, who is 32 years old.“They’d rather pay $4, hop onan electric moped, go 20 min-utes and be done with it.”

Revel’s vehicles, which areregistered with the New YorkState Department of Motor Ve-hicles as mopeds, are availableto anyone with a driver’s li-cense. Riders download thesmartphone app and pay a one-time $25 fee for a backgroundcheck. The first 20 minutes of aride is a $4 flat rate. Everyminute after that costs 25 centswhile moving or stopped intraffic, or 5 cents while parked.

When they are finished, rid-ers must park the mopeds in alegal space within one of thepilot neighborhoods. Riderscan travel anywhere in Brook-lyn or Queens, but not to theBronx, Manhattan, or Staten Is-land. Leaving the boundariescould result in a fine between$50 to $150.

“It’s a way to get to othertransportation,” Mr. Reig said.“It kind of fits in with otherpublic transit.”

New York City will be thefirst municipality where Revel

have invested about $50 mil-lion to improve the property,revamping both the retail andoffice space. Terminal Storesalready houses a bar, restau-rants and specialty foodshops, but the joint venturebuying the property intendsto bolster the property’s re-tail space with food venues tocreate a neighborhood attrac-tion like Chelsea Market, withits restaurants and specialtystores.

The project falls into L&L’ssweet spot of reviving his-toric properties. L&L com-pleted a $47 million restora-tion of the historic AmericanTelephone & Telegraph Com-pany Building at 195 Broad-way, where the firm createdhigh-end retail space andbrought in Japanese restau-rant Nobu. Before that, L&Lrevamped 200 Fifth Ave. andbrought in the city’s first Eat-aly location.

Normandy also has had itseye on redeveloping historicproperties with an aestheticfavored by creative and tech-nology firms. The company isredeveloping the upper floorsof 880-888 Broadway, abuilding just north of UnionSquare Park that houses ABCCarpet’s flagship store.

has launched, hoping to mirrorthe success of similar mopedprograms in cities such as At-lanta and San Francisco. Thestartup has raised $1 millionfrom about 25 friends, relativesand angel investors.

“This isn’t the end-all be-allof all transportation,” Mr. Reigsaid. “We’re just giving anotheroption for people to get intosomething that’s affordable.”

Unlike bike-share programs,Revel mopeds require moregovernment oversight. All vehi-cles, which have a maximumspeed of 29 mph and a 50-milerange on a single charge, mustbe registered with the New YorkState Department of Motor Ve-hicles and include insurance.

A spokeswoman for thecity’s Transportation Depart-ment said Revel reached out inthe spring to let it know aboutthe planned service. Theagency noted that all usersmust comply with the rules ofthe roads, including the postedspeed limit and parking regula-tions.

“We appreciate that the

company has clearly statedsafety as a priority, and we willcertainly be watching closelyas the program rolls out on ourstreets this summer,” thespokeswoman said.

For their part, Revel found-ers say they have been meetingwith local leaders and police.“We’re trying to be good part-ners and make sure no one issurprised by this,” Mr. Reigsaid.

Revel founders are confidentthey have found the ideal pilotneighborhoods in Brooklyn.With increasing concerns aboutcongestion and the looming L-train shutdown, many Brooklynresidents say they will be look-ing for other ways to getaround.

Sam Jones, a comedian wholives in Williamsburg, said shethinks the mopeds will be aconvenient way to bypassproblems caused by the tempo-rary loss of the L train.

“A lot of people don’t wantto take Citi Bikes because it’slong and you’re super sweatywhen you go into the city or

GREATER NEW YORK

work or around town,” Ms.Jones said. “So I think it wouldbe a great idea.”

Ryan Ford, a Bushwick resi-dent, said he thinks the electricmopeds will be popular. “Peo-ple will be fighting over them,”he predicted.

Revel offers free trainingsessions for prospective riderswho are new to mopeds, whichthey can sign up for online af-

ter registering. The companyaims to expand to the otherboroughs, although it has yetto set a timeline.

Mr. Reig said he hopes peo-ple will embrace the electricmopeds as a way to travelaround Brooklyn and explorethe city. “This is a way to kindof just get on a moped and gosomewhere else that normallyyou wouldn’t go,” he said.

Brooklyn Gets a NewWay to RollRide-share startupsays electric mopedsare the ‘missing link’for city transportation

A rider tested out an electric moped. The vehicles are available in the Greenpoint, Williamsburg and Bushwick neighborhoods.

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Revel’s Frank Reig and Paul Suhey hope to expand the program.

square feet of the buildingthat is now used for storagelikely would be converted forother uses such as offices.

The sale, when completed,amounts to a good paydayfor its owners. Coleman P.Burke, Waterfront’s foundingand managing partner, andinvestors paid about $12 mil-lion for the property in 1983.In 2014, GreenOak bought a49% stake that valued theproperty at about $300 mil-lion.

The deal underscores thedramatic changes that havetaken place over the last sev-eral decades and those thatare slated to come. New of-fice, residential and retailbuildings in the Hudson YardsDistrict are on the rise to thenorth, filling with tenantsacross the sectors. In Chelseaand other neighborhoods inthe Midtown South area,technology companies, firmsin the creative sector and fi-nancial firms continue to de-vour space, sometimes payingrents well above $100 asquare foot.

Earlier this year, Alphabet

Inc.’s Google bought the 1.2million-square-foot ChelseaMarket building, another for-mer industrial structure sev-eral blocks south of TerminalStores, for about $2.4 billion.

The full-block TerminalStores building, bounded by11th and 12th Avenues andWest 27th and West 28thStreets, opened in 1891 andonce was open to trainstransporting freight for large

and small merchants. Longafter Chelsea’s industrialdays, The Tunnel nightclubopened in the building’sbrick-walled arcade in themid-1980s and lasted morethan a decade. Today, theconnected sections that makeup Terminal Stores are nowhome to Uber TechnologiesInc., L’Oréal USA and archi-tectural firm Grimshaw.

Since 2014, the owners

A joint venture of L&LHolding Co. and NormandyReal Estate Partners hasagreed to pay about $900million for a storied, formerfreight warehouse in Manhat-

tan’s Chelseaneighborhood,tripling theproperty’s val-

uation from four years agoand underscoring the area’sdramatic changes over thepast several decades.

L&L and Normandy signeda contract to acquire the farWest Side property known asTerminal Stores from thepartnership of WaterfrontNew York and GreenOak RealEstate Advisors LP, accordingto people familiar with thedeal. L&L and Normandy,which have track recordsoverhauling historic and un-derused properties, plan toinvest a significant amount toredevelop the property, im-proving its interiors by ac-centuating its historic fea-tures and adding moderntouches. About 500,000

BY KEIKO MORRIS

FormerWarehouse Sells for $900Million

A joint venture signed a deal to acquire the far West Side property.

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rant lost $100,000 in lost busi-ness as well as spoiled steak,lamb, produce and wine.

The restaurant reopenedTuesday, but business was slowall week as city and utilityworkers continued to clean upfrom the explosion, said man-ager Linleigh Smith. “It’s been

terrible,” she said. “There’s nofoot traffic, and that’s a hugeportion of our business.”

The explosion of the nearlycentury-old steam pipe on FifthAvenue near 21st Street spewedasbestos and other debris intothe air. Business owners and atleast 500 residents were dis-placed as city workers cleanedbuilding exteriors, removed as-bestos contamination and com-pleted safety inspections.

On Saturday, officials withthe city’s Office of EmergencyManagement said 39 buildingshad been cleared to reopenand four others had been par-tially cleared. The results frommore than 1,800 outdoor airsamples tested for asbestoshave shown that the air issafe, officials said.

It isn’t clear how manybusinesses were closed afterthe explosion. A spokeswomanwith the city’s Department ofHealth and Mental Hygienesaid 11 eateries were located inaffected buildings, most ofwhich have reopened.

The New York City Depart-ment of Small Business Ser-vices has provided assistanceto more than 110 businesses,including helping owners filefor insurance claims, accord-ing to Commissioner GreggBishop. The department hasalso worked with the non-profit Renaissance EconomicDevelopment Corp. to createan emergency-loan program,which will provide loans of upto $30,000 to affected busi-nesses at a 2% interest rate.

“In terms of recovery, it’sactually moving faster than Ianticipated,” Mr. Bishop said.

Holly Kwon, co-manager atAbracadabra NYC, estimatedthat the costume and accessorystore lost out on $20,000 insales during its four-day closure.Customers complained that 21stStreet was closed at the inter-section with Fifth Avenue, forc-ing them to walk around theblock to enter the store.

A few doors down at In-scape, a meditation center,management has offered dis-counted sessions to help peoplein the area handle the stressfrom the explosion, said workerCharlotte Gibson. Attendanceappears to be up, she said.

“There is definitely a differ-ent energy,” Ms. Gibson said.

BY KATE KING

Flatiron Businesses Reopen After Steam-Pipe Blast

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the day, the increased trafficshows that more people areappreciating New York’s natu-ral landscape.

“There are issues createdby this heavy usage but it’salso a great thing,” Mr.Thompson said. “We want tosee people come out.”

At the New York-based fro-zen-yogurt chain 16 Handles,the main draw has always beenthe self-serve aspect: Custom-ers are free to mix and matchflavors and toppings at will,paying a per-ounce price, vary-ing by store, for their creations.

But this summer, patrons atthe 10-year-old chain’s EastVillage location may be sur-prised to find a soft-serve ma-chine positioned behind thecounter. It is reserved for aspecial new line of frozentreats, dubbed Sugalips, thatemployees are charged withmaking.

Included in the offerings: anouter-space-inspired GalaxyCone, priced at $8.95, thatcombines frozen yogurt, cottoncandy and rock candy, a color-ful dessert designed with thefood-on-social-media era inmind.

The addition is a consciouseffort by the chain, which has10 stores in the five boroughsand another 26 in the rest ofthe U.S., to freshen its image.And it comes as 16 Handles hasseen its same-store sales de-cline in each of the past threeyears, following an initial pe-riod of consistent growth, ac-cording to Solomon Choi, thecompany’s founder and CEO.

“Brands can continue tothrive if they stay on top ofwhat’s trending,” said Mr.Choi, who is considering bring-ing the Sugalips line to hisother stores.

Mr. Choi has also expandedhis lineup of selections to in-clude ice cream and gelato of-ferings at all 16 Handles stores.Next month: Italian ice andcustard are being introduced.

Restaurant-industry expertssay it is no secret why 16 Han-dles is being forced to inno-vate. For starters, the conceptof self-serve frozen yogurt is

no longer seen as novel. Buteven more important: Frozenyogurt isn’t the trendy dessertit once was.

Artisan ice-cream compa-nies, offering a wave of creativeand even vegan flavors, arecommanding increased atten-tion. So, too, are makers of mul-ticultural frozen treats, such as

“There’s a lot of passingzones that have developed,”Mr. Osborn said. “Ideally atrail is a single path goingthrough the woods but it’sgotten very wide in some sec-tions, 30, 40 feet wide. It’s notthe ideal situation for a trail.”

To accommodate the risingtide of hikers, the conferencehas been rebuilding parts ofthe trails, including addingstone stairs, switchbacks andtrail markers.

“We want people to getaway from their computersand their phones for a whileand get out into the woods,”said Evan Thompson, managerfor Hudson Highlands StatePark, which includes Break-neck Ridge. “But what happensis, it creates some impactsthat weren’t there before.”

In addition to maintainingthe trail, park officials andvolunteers say they are work-ing to protect the hikers them-selves. In 2017, trail stewardsfor the New York-New JerseyTrail Conference turned away699 unprepared hikers fromBreakneck Ridge.

“They might not have wateror the appropriate footwear,”Mr. Osborn said. “There’s a

On a recent Saturday, BertWolcott hopped on a Metro-North train at Grand CentralTerminal and headed north.

The 23-year-old Brooklynresident was looking to getout of the city, breathe infresh air and soak up nature.Shortly into his ride, he real-ized several others in his traincar had the same idea.

An hour and a half later, Mr.Wolcott and dozens of otherriders from New York Citypoured out of the train onto thesingle wooden platform withchipping yellow paint at theBreakneck Ridge trail stop.

“I was amazed how easy itwas to get out of the city toget here,” said Conor Mook, 24,standing on the grassy high-way shoulder after getting offthe train with Mr. Wolcott. “It’sone train ride, it doesn’t takethat long, and then you’re in acompletely different world.”

Mr. Wolcott and Mr. Mookwere just a few of the hundredsof New Yorkers heading out totrails along the Hudson Valleyon Saturday. Weekend atten-dance has been increasingsteadily on the Hudson Linethanks to Metropolitan Trans-portation Authority accessibil-ity and social media buzz. Be-tween 2012 and 2017,attendance at rail-accessiblestate parks rose almost 20%,according to state data.

The trails are an exciting dis-covery for New Yorkers lookingfor an easy way to get outdoors.But park officials and trailstewards say they are having tomake adjustments to accountfor the increased foot traffic.

“The trail itself is in much-needed states of repair,” saidHank Osborn, regional pro-grams manager for the NewYork-New Jersey Trail Confer-ence, a volunteer organizationthat maintains and protectspublic trails.

“It’s definitely degraded interms of the increased ero-sion,” Mr. Osborn said.

Breakneck Ridge, with itsformidable rocky climb andsweeping views of the HudsonRiver, has become one of themost popular destinations inrecent years, garnering morethan 100,000 visitors annually,according to the trail confer-ence. In 2013, the trail sawabout 600 visitors on a busySaturday. Now, Mr. Osborn said,that number is around 2,000.

BY LARA KORTE

Hikes Spike on Trails Along Metro-North

Breakneck Ridge offers sweeping views of the Hudson River. The Cold Spring station, below, is one of the Metro-North stops providing access to hiking trails.

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16 Handles CEO Solomon Choi

GREATERNEWYORKWATCH

DRUG BUST

State Troopers Seize200 Pounds of Pot

New York State Police saythey have seized 200 pounds ofmarijuana with a street value ofmore than $1 million after pull-ing over a vehicle on a HudsonValley road.

Troopers said Sunday thatthey pulled over a rented pickuptruck Friday on Route 28 in theOrange County town of Mont-gomery, 60 miles north of NewYork City.

Troopers say a strong odor ofmarijuana led them to searchthe vehicle. They found dozensof clear plastic bags filled withpot stuffed into a large woodenbox in the bed of the pickup.

A 35-year-old man fromStamford, Conn., and a 69-year-old man from New Rochelle, N.Y.,were charged with criminal pos-session of marijuana. Both werebeing held Sunday in the OrangeCounty Jail on $50,000 cashbail.

—Associated Press

CRIME

Man Is Fatally ShotIn Manhattan

The New York Police Depart-ment says a 21-year-old Bronxman has been fatally shot inManhattan.

The NYPD said officers re-sponded around 1:30 a.m. Sundayto a 911 call reporting a man ar-riving at St. Luke’s Hospital witha gunshot wound to the chest.

The NYPD said the man wasbrought to the hospital in a pri-vate vehicle. He was pronounceddead at the hospital. He wasidentified as Rashaun Pope, wholived on College Avenue in theBronx.

Police said the shooting oc-curred near West 125th Streetand 12th Avenue in Harlem. Noarrests have been reported. Aninvestigation is under way.

—Associated Press

through phases and I thinkright now hiking is really apopular activity for people.”

After reaching the summitof Breakneck trails, hikershave the option to continuedeeper into the state park,take a shortcut exit back tothe highway, or follow the trailto the nearby town of ColdSpring, N.Y., where little cafesand shops offer a pleasantpost-hike respite.

Park officials say the influxof people certainly presents itschallenges, but at the end of

the valley with his girlfriendNicole Into, 20.

“I saw the pictures and Iwas like, ‘We have to gothere,’ ” Ms. Into said.

The hashtag #BreakNeck-Ridge on Instagram has morethan 30,000 posts, many ofthem featuring hikers lookingout contemplatively over thelandscape, doing handstandsor climbing boulders.

“Hiking is kind of the newjogging,” Mr. Thompson said.“Every few years there’s a newsport that goes crazy. It goes

high number of flip-flops, orshoes without laces, or bootswithout socks.”

For hikers who do come pre-pared, the trek promises a1,500-foot ascent and panoramicviews of the Hudson River andsurrounding hills. Many saidthey heard about it by word-of-mouth or social media.

“We wouldn’t be here if wehadn’t seen it on Instagram,”said Will Kerwick, a 22-year-old Fordham University gradu-ate who was standing on arock formation overlooking

Thai-style rolled ice cream.“The audience has grown up

and become discerning,” Ar-lene Spiegel, a New York-basedrestaurant consultant, said offrozen-dessert customers.

Mr. Choi’s company isn’t theonly frozen-yogurt chain in thecity that has tweaked its for-mula. Dallas-based Red MangoYogurt Café Smoothie & JuiceBar, which has about 20 loca-tions in the five boroughs, hasadded smoothies and juice of-ferings to its product offeringsin recent years. In some stores,the company is also featuringlight foods, including soup.

While such changes mighthelp bring frozen-yogurtchains a broader clientele, ex-perts warn there is a risk ofalienating the regular cus-tomer base if a company goestoo far.

“I think it’s important tostay true to the core menu of-ferings,” said Amanda Topper,an associate director withmarket research firm Mintel.

BY CHARLES PASSY

As Sales Cool, Frozen-Yogurt ChainIntroduces a New Twist on Treats

The Galaxy Cone mixes frozen yogurt, cotton candy and rock candy.

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Bear Mountain

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THEWALL STREET JOURNAL.

*Within 5 miles of an MTA stop†Includes group camp, hiker trailand Beaver PondSource: New York State Office for Parks,Recreation and Historic Preservation

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THIS SATURDAY • 7:10PM

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LIFE&ARTS

fect, but not nearly as marked. Thebest product containing citronellaoil, which has been marketed asthe “mosquito plant” and is classi-fied by the Environmental Protec-tion Agency as a biopesticide, pro-tected volunteers for 20 minutes.

While many consumers worryabout the toxic side effects ofDEET, Dr. Gluckman says, “Therehas never been one credible studyshowing a side effect from DEETother than an allergic reaction.” Itis possible that consumers confuseDEET with the toxic pesticide com-monly known as DDT, which hasbeen banned in most countries.People who are worried aboutDEET, he says, “are missing thepoint, since bites from ticks ormosquitoes aren’t only uncomfort-able but also carry the risk oftransmitting serious viruses andbacteria like the ones that causeWest Nile or Lyme disease.”

Before You Eat ThisFor millennia, people have used cer-tain foods and herbs to combat bugbites or to scare insects away. Gar-lic has been one of the most popu-lar foods used, but Dr. Gluckmansays every related study he hasseen has shown no greater effect

than when subjects ate a placebo.Some people swear by certain

types of vitamin B, including thia-mine (B1), an excess of which is ex-creted through the skin and is saidto repel mosquitoes. However,“there is no evidence that ingestingthiamine works at all,” Dr. Gluck-man says. Same goes for eating ba-nanas, and for any number of prod-ucts that claim to deter bugsthrough ingestion. “As a general

rule,” he says, “if the Centers forDisease Control and Preventiondoesn’t mention that something isan effective bug repellent on itswebsite, it doesn’t work.”

On the flip side, eating spicyfoods or drinking alcohol maycause a person to breathe moreheavily, and since mosquitoesare attracted to the carbon diox-ide we exhale, the more laboredthe breath is, the more likely

that person is to be the targetof insects.

Scratching the ItchIf a person suffers from severe al-lergic reactions to mosquito bites,there aren’t many nonchemicalways to treat the itching andswelling. Foods high in vitamin Care known to combat inflamma-tion, though Dr. Gluckman is skep-tical that eating loads of orangeswill lessen the swelling from abite, since vitamin C doesn’t im-pact histamines, chemicals thattrigger the immune system.

That said, Dr. Gluckman says, achemical histamine blocker such asBenadryl or Zantac works best. “Ifyou don’t want to put it in yourbody, there are topical versions ofBenadryl,” he adds.

Prevention TechniquesThe best way to keep the bugs awayis to discourage their presence, Dr.Gluckman says. Drain any standingwater in your backyard. Try tocatch and kill mosquitoes early inthe season, before they breed, byusing a carbon-dioxide trap.

Wear tightly woven fabrics—mosquitoes can easily bite througha cotton T-shirt.

IT IS HIGH SUMMER, when thebuzzing of insects serves as thesoundtrack to the season. Chemi-cal repellents have long been con-sidered the best way to ward offmosquitoes and ticks, but manyswear by foods and other deter-rents rumored to be less toxic.

But do these work? One expert,Stephen Gluckman, professor ofmedicine at the Perelman Schoolof Medicine at the University ofPennsylvania, and a specialist ininfectious diseases, explains themyth of garlic and the gold stan-dard in bug-bite prevention.

By the NumbersThe most comprehensive com-

parative study, says Dr. Gluckman,was published in the New EnglandJournal of Medicine in 2002. Vol-unteers applied 16 products mar-keted as bug deterrents to an arm,then placed that arm in a cagefilled with mosquitoes. The bestproduct was one with 24% diethyl-toluamide, also known as DEET.

“That protected the volunteersfor 301 minutes,” Dr. Gluckmansays. Other products had some ef-

BY HEIDI MITCHELL

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To keep drivers aware of children in the back seat, companies are launching new devices and technologies. Below,Sense A Life’s system, and bottom left, a dashboard alert that will become a standard feature on many Nissans.

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Persistent problem: a mosquito in a Lomen Bros. cartoon from the early 1900s.

Vehicular heatstroke deathsof children in the U.S.

2018*29

Source: KidsAndCars.org

THEWALL STREET JOURNAL.

*as of July 26

Vehicular heatstroke deaths of childrenincreased in the 1990s as statesrequired that car seats be placed inthe back to avoid front-seat air bags.

Tragic Toll

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DRIVERS GET reminders to weara seatbelt, turn off the headlightsand close the gas-tank door. Now,they’re also getting alerts to checkthe back seat for young passengers.

This year 29 children have diedfrom vehicular heatstroke, on paceto make 2018 one of the deadlieston record, according to KidsAnd-Cars.org, a child-safety advocacygroup. Heatstroke is the leadingcause of non-crash vehiculardeaths for children younger than15, according to the AmericanAcademy of Pediatrics. The num-ber of deaths—an annual averageof 37—has remained stubbornlyconsistent for years. Most arecaused when children are unknow-ingly left in a car.

Amid concerns that the numberof deaths hasn’t declined, moremeasures to prevent them are un-der way. New car technologies,phone apps, car seats and educationefforts aim to keep drivers aware ofyoung back-seat passengers.

Nissan plans to announce onTuesday a system that will reminddrivers to check for occupants inthe back seat. Nissan’s system willbecome standard on all four-doortrucks, cars and SUVs with powerlocks by its 2022 model year. Nis-san is believed to be the first tomake such an alert a standard fea-ture across its fleet of applicablevehicles, a move safety-advocateshave long recommended.

Last year, Nissan made the tech-nology standard on its Pathfinders;more vehicles will have it this year.The system detects when the reardoor is opened and closed beforeand while the car is on. After a tripends, a reminder to check the backseat appears on the dashboard. Ifthe rear door isn’t opened, the horn“chirps” six times.

“No one ever thinks it couldhappen to them until it happens tothem,” says Elsa Foley, a Nissan in-dustrial engineer. “Making this astandard feature is one thing wecan do to help.”

This year General Motors ex-panded its rear-seat reminder sys-tem, available since 2016, to 29models. It plans to make the alertstandard on most four-door vehi-cles, says Tricia Morrow, a GMsafety strategy engineer.

BY ELLEN BYRON

HEALTH

Alerts Aim to PreventHot-CarDeathsAs fatalities remain stubbornly high, new sensors and other reminders are in the works; Nissan tomake its alert a standard feature

This month, some of HyundaiMotor’s 2019 Santa Fe models arehitting dealerships with a newrear-occupant alert system. It in-volves a motion sensor thatsounds the horn if movement isdetected inside the back seat forup to 24 hours after the car isturned off. The system also sendsan alert to the owner’s phone.

Hyundai hopes the motion sensorwill save children whom a driverhas left behind as well as childrenwho enter a car on their own butcan’t get out—the cause of nearlyone-third of hot-car deaths, accord-ing to KidsAndCars.org.

The auto makers’ moves come asthe Hot Cars Act of 2017 makes itsway through Congress, so far withbipartisan support. The law wouldrequire auto makers to equip allnew cars with systems that alertdrivers to check the back seat oncethe car is turned off.

“You have a reminder to put onyour seat belt, take your keys fromthe ignition and that you’ve leftyour headlights on,” says Janette

Fennell, presi-dent of Kid-sAndCars.org,which is back-ing the legisla-tion. “Who de-cided that it’smore impor-tant not tohave a dead carbattery than adead baby?”

Even on cooldays cars canheat upquickly, rising

nearly 20 degrees Fahrenheit injust 10 minutes, experts say. Be-cause a child’s body heats up threeto five times as fast as an adult’s,heatstroke sets in swiftly. To high-light the risk, the Weather Channeldeveloped the “Scorching CarScale.” For example, if the forecastfor Omaha is 86 degrees Fahren-heit, after 10 minutes it will be 105degrees inside a car, and after 30minutes it will be 120 degrees.

“The hope is those numbers willbe shocking to individuals andthey’ll pay attention,” says MikeChesterfield, director of weatherpresentation for the WeatherChannel. “A lot of people assumethat if they crack a window they’lllower the temperature in the car,but studies have found that it willhave very little effect.”

This month, the Weather Chan-nel and the National Highway Traf-fic Safety Administration an-nounced an effort to raiseawareness of the risk of hot cars.The move is part of Nhtsa’s new

push this summer to encourage by-standers to act if they see a childalone in a car. “Anybody can noticethat there’s a child in the car, dial911 and make a rescue,” says HeidiKing, Nhtsa’s deputy administrator.

Parent-communication appsused by schools and daycare cen-ters are adding notification toolsto alert families when a childdoesn’t arrive. Tadpoles, an appused annually by more than 3,000child-care centers, recentlylaunched its “Unexpected Absence”feature. “Rather than blaming par-ents, we need early-childhood pro-grams to think like partners andfigure out a solution,” says Kai-leéBerke, CEO of Teaching Strategies,which owns Tadpoles.

Ms. Berke says the change wasinspired by Karen Osorio, a Procter& Gamble scientist who lost herdaughter to vehicular heatstrokelast year. Ms. Osorio, her husbandand several P&G colleagues formedthe Sofia Foundation for Children’sSafety to educate parents and oth-

ers about the risk of hot-cardeaths. The foundation has beenreaching out to pediatricians andparents, urging drivers to put a“bag in the back.” If drivers get ac-customed to placing a frequentlyused item such as a bag in theback seat, they will habituallycheck the back seat every timethey leave the car, Ms. Osorio says.

This month, P&G’s Pampersbrand began distributing in hospi-tals pamphlets that include the“bag in the back” advice, reachingabout 500,000 families, the com-pany says.

Goodbaby International, makerof Evenflo and Cybex car seats, in2015 introduced a sensor systemon some models’ chest clips, whichchimes after the ignition is turnedoff, reminding the driver that achild is in the car. The feature canbe linked to users’ cellphones, in-cluding notifying designated con-tacts if initial alerts to a caregivergo unanswered, the company says.

Homespun efforts are also onthe rise. Ms. Fennell keeps a list ofmore than 300 people who havesent her organization productideas. This month KidsAndCars.orgbegan promoting “CellSlip,” apouch that blocks mobile phonesignals. Keeping a phone in thepouch in the back seat cuts downon distractions while driving andprovides another reason to checkthe back of the car before walkingaway, Ms. Fennell says.

Another idea comes from aFlorida company, Sense A LifeCorp., which has developed a wire-less sensor technology that givesdrivers multiple alerts. Sense aLife’s CEO, Fadi Shamma, is apharmacist by day who has spentmost nights and weekends in re-cent years working on the systemwith his neighbor, Jim Friedman,an electrical engineer. “We kepthearing about these deaths andknew we had to do something,”Mr. Shamma says.

BURNING QUESTION | By Heidi Mitchell

DOALTERNATIVE BUG REPELLENTSWORK?

A12 | Monday, July 30, 2018 THEWALL STREET JOURNAL.

LIFE & ARTS

‘SCOTTY AND the Secret Historyof Hollywood,” which opened Fri-day, closes with a video that wasshot, unbeknownst to its furtivesubjects, in the dead of night. I’lltell you more about its contentslater, but for now let me try tosuggest the special tone of MattTyrnauer’s documentary feature,which conveys a wealth of surpris-ing information and/or titillatinggossip in the cheerfully matter-of-fact voice of its own subject, aclear-headed nonagenarian namedScotty Bowers.

Simply put, Mr. Bowers was,during a good part of Hollywood’sgolden age, a pimp to the stars.Less simply put, he was a pansex-ual pimp and an unquenchablehustler. He catered to stars, social-ites and assorted celebrities whosesexual preferences sometimes dif-fered dramatically from the autho-rized tales in glossy magazines.Scotty’s heyday began shortly afterthe end of World War II, andwound down when the culture wastransformed by the emergence ofAIDS. For many in the movie in-

dustry this was a period of grow-ing prosperity and widespread op-timism, but for gay stars anddirectors there was abiding fear ofbeing outed.

Mr. Tyrnauer is a serious film-

maker—his “Valentino: The LastEmperor” was a first-rate docu-mentary portrait of the legendaryfashion designer Valentino Gara-vani. His new doc, which wasbased on Mr. Bowers’s memoir,

“Full Service,” combines tell-all ap-peal with a seriously significantstory of prejudice and hypocrisyon a literally mythic scale.

Some of the names named in thecourse of the film once conjured upshining images around the world;now they’re part of a history thatseems both ancient and persistent:Cary Grant, Katharine Hepburn,Spencer Tracy, Lana Turner, Ran-dolph Scott, Walter Pidgeon, AvaGardner, Charles Laughton, RockHudson. Scotty has stories to tellabout all of them, as well as theDuke and Duchess of Windsor, livinglife on vacation as they saw fit inthe privacy of a bungalow behindthe Beverly Hills Hotel.

Scotty also tells stories abouthimself, ad all but infinitum andwithout notes, though he has morenotes than he knows what to dowith. He can’t sit at his desk anymore, not because there’s anythingwrong with him physically, but be-cause he’s such a hopeless packratthat mountains of jottings andother junk on his desk defeat allefforts to conquer them.

He’s the improbable star ofwhat would be, except for the corecontent, an all-American odyssey.Mustered out of the Marines afterV-J Day, Scotty shows up in L.A.with nothing to offer but his goodlooks. Soon after he finds a jobpumping gas at a Richfield stationon Hollywood Boulevard, he findshimself in the swimming pool, andthen bed, of an illustrious cus-tomer. Working out of the Rich-field station, and turning tricks allthe while, he becomes a primoprocurer for the movie colony,and, by his own plausible account,good friends with a rich assort-ment of Tinseltown’s famous. Heis not, at the present time in hislong life, self-reflective, let aloneself-analytical, but he is compan-ionable, disarmingly likable, hon-orable by his own lights, unfail-ingly amiable and kind to animals.

And the nighttime video shot onthe sly? It shows a skunk and tworaccoons eating from a can of foodthat Scotty’s kitty declined to fin-ish. In this film, almost nothing iswhat it seems.

Pilot James Chue tries to fly todestinations where he can train forenduro races—mountain bike raceswhere only the downhill portion istimed. He catches some air on thetrail in Plymouth, Mass., above.

GREENWICHENTE

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Matt Tyrnauer’s documentary about Scotty Bowers (center) plays hedonismagainst anti-gay prejudice in Hollywood’s halcyon days.

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WHAT’S YOUR WORKOUT? | By Jen Murphy

APilot’s Best JobPerk:His Bike Flies Free

Flying for JetBlue allows an avid mountain biker to explore new territory

‘Can’t you please be quiet?’”If he can’t access a gym, he

works out in his hotel room anddoes crunches, push-ups and thesuperman exercise, where he lieson his stomach and alternates lift-ing his opposite arm and leg towork his lower back. He alwaystravels with resistance bands, evenstretching briefly in the cockpitafter autopilot is engaged at cruis-ing altitude.

On layovers of 18 hours or lon-ger, he hits mountain bike trails. Athome, he has five single-trackmountain bike trails 5 miles fromhis home. On weekends he likes todrive to Highland Mountain BikePark in Northfield, N.H. “You putyour bike on a chairlift, so ridinghere is really just about the down,no climbing,” he says. “I lovegetting a little crazy and hittingmassive jumps.”

The DietMr. Chue travels with Mason jarsof fresh-cut oats for breakfast.Thai food is his go-to on the road.He orders a ginger chicken stir-fry

with brown rice and saves half toeat on the plane. At home, he hasscrambled egg whites and avocadoslices on top of whole wheat toast,along with coffee and a banana forbreakfast.

Lunch is a turkey sandwich orsmoothie made with yogurt, blue-berries, banana, avocado andwhey protein. Chicken with broc-coli and ziti is a family dinner fa-vorite. The children eat pasta, butMr. Chue and his wife make theirportion with spaghetti squash.Post-dinner ice cream motivateshim to put in extra miles on thebike. He snacks on Sour PatchKids when he rides.

The Gear & Cost“I sound like a bike snob, but Ilike fancy gear,” he says. “I use it

so much, I get my money’s worth.If you chintz out, you end up pay-ing the same amount fixing or re-placing parts.”

His 2019 Specialized S-WorksStumpjumper 29 cost $9,500. Hepaid $3,000 for his 2017 Special-ized Fatboy Comp Carbon, a bikewith wider tires.

His EVOC bike bag cost $399.He pays $20 a month for his gymmembership.

The PlaylistAt the gym, he listens to modernor early 1990s hip hop, includingthe Notorious B.I.G., Tupac Shakurand Logic & Marshmello. “I likemy cadence to match the tempo ofthe music, so I put on techno andgo into beast mode on the trails,”he says.

WORK TRAVEL can take timeaway from favorite hobbies. ButJames Chue has figured out howto turn time on the road into moretime on his mountain bike. A pilotfor JetBlue, Mr. Chue requests spe-cific trips that allow him to uselayovers to explore new terrain orcompete in enduro races: moun-tain bike races where only thedownhill portion is timed.

“Travel can be an easy excuse tofall out of shape,” he says. “I see itas an opportunity to go play.” Mr.Chue, 37, tries to do three-daytrips so that he can be home fourdays with his wife and two chil-dren in Kingston, Mass.

Most airlines charge a fee tocheck a bike, but Mr. Chue isexempt from paying $50 each wayfor his bike with JetBlue. “Oneperk of being the pilot,” he says.

He discovered some of hisfavorite mountain biking terrain,including Tiger Mountain nearSeattle and South Mountain Park inPhoenix, on layovers. He belongs toa cycling chat group on themessaging app Slack and uses it toconnect with local mountainbikers—both casual riders andpros—ahead of his trips. “Peoplewill pick me up from my hotel andwe head to the trails for a fewhours or the whole day,” he says.

Three years ago he began enter-ing enduro races. Cyclists climbanywhere from 3,000 to 10,000-plus feet to the top of a mountainin an allotted amount of time.They’re timed on the descent,which is broken up into three tosix stages of varying length, steep-ness and difficulty. Transfers be-tween stages might involve hikingor even taking a chair lift andaren’t timed.

This summer, he’s tried to lineup his work schedule so he canparticipate in the MAXXIS EasternStates Cup, an enduro competitionof 10 races. He plans to race inVictory Hill, Vt., on Aug. 12.“These races are really difficult, sothey provide motivation to workout those days I don’t feel like go-ing to the gym,” he says.

The WorkoutMr. Chue alternates between bikeand weight days. “I lift so I canmountain bike,” he says. “Strengthtraining prevents a lot of injuries.”He says strong legs, core andshoulder muscles are importantfor mountain biking. “If you flipover the handlebars while flyingdown a rocky trail, your shoulderswill dislocate if they’re weak,” hesays. A strong core also helps himmaintain good posture and avoidlow back pain when sitting in thecockpit.

He hits the gym three days aweek. Workouts are dedicated todifferent muscle groups and he al-ways throws in core work. He doesfour sets of each exercise and aimsfor 14 reps. “I grunt through thoselast reps,” he says. “I’m the guy inthe gym that you glare at thinking,

BY JEN MURPHY

FILM REVIEW | By Joe Morgenstern

TURNING TRICKS IN TINSELTOWN

To fly with a bike or to rentone on the road is the moneyquestion, says Jim Potter, ownerof Vecchio’s Bicicletteria in Boul-der, Colo. The destination oftendictates the decision.

If you’re traveling to a placewith a strong bike culture, you canprobably rent a serious bike. Tour-ing companies, like Trek Travel,usually have access to fancierbikes. “More often than not, stan-dard bike shops rent recre-ational city bikes witha generic fit,” hesays. “If you’retall or short orlooking forperformance,you’ll proba-bly be morecomfortablewith your ownbike.”

A good bikecase can cost $300 ormore. “That’s not a terribleamount if you’ve already spent$4,000 on your bike,” he says.There are two major styles. Softcases roll up when the bike is re-moved. Hard, plastic cases aremore protective but, he says, canbe fairly bulky and hard to fit inthe trunk of a car.

Snap pipe insulation tubing,available at most hardwarestores, over the frame of the bikefor added protection, he says.Don’t let the air out of the tires—that protects the rims of thewheels. Check with your airlineabout baggage fees, which typi-cally range from $50 to $200.Some, like Southwest Airlines,count bike bags under a certainsize and weight toward the stan-dard carry-on allowance.

Do Homework BeforeFlying With a Bike

THEWALL STREET JOURNAL. Monday, July 30, 2018 | A13

LIFE & ARTS

ART REVIEW

UnderstandingA Complex AestheticAnexhibitionexploresthecontradictionsandparadoxesofthepre-Raphaelite

Brotherhoodbypresenting itsworksalongsideoldermasterpieces

to a similar “The Annunciation.”Yet there’s no evidence that Mil-

lais ever saw the book or this VanEyck, whose mood by contrast isjoyful and expectant, though bothwomen are clearly burdened andobedient to strict, prescribedroles. Exhibition curator MelissaBuron is not making the literalconnection, but positing insteadthat Millais had completely ab-sorbed Van Eyck’s aesthetic inmaking his image.

Yet by hanging these Pre-Rapha-elite paintings alongside Old Mas-ters—the self-proclaimed first in-ternational exhibit to do so—theshow tempts visitors to focusmainly on the literal connections:similarity in poses, compositionalelements, textures, colors and thelike. They are definitely here. FordMaddox Brown’s “Oure Ladye ofGood Children” (1866) closely par-allels Piero di Cosimo’s “Madonnaand Child With the Infant St. Johnthe Baptist” (c. 1505-10), while“Love and the Maiden” (1877) byJohn Roddam Spencer Stanhopechannels several Botticelli worksand Evelyn De Morgan’s “Flora”(1894) could have stepped out ofBotticelli’s “Primavera,” a smallcopy (1860s-1880s) of which byEmilio Constantini is here. Too,Rossetti’s “Proserpine” (1878)twins well with Botticelli’s “Alle-gorical Portrait of a Lady”(1475-1485), and Rossetti’s “Veron-ica Veronese” (1872) mirrors Vero-nese’s “Lucrezia” (1580/1583).

But the story of “Truth andBeauty,” with all its paradoxes, isricher than that. Sometimes thatcomplexity is shown overtly, as inthe gallery reverently anchored byRaphael’s small, sincere “Self-Por-trait” (1506), painted when he wasabout 23 and on loan from theUffizi Galleries. But often thegroup’s deviations from their statedideals are merely implied, as in thedisconnect between their fancifulnarrative and pictorial inventionsand Ruskin’s command to “go tonature…rejecting nothing, selectingnothing, and scorning nothing.”

The Pre-Raphaelites spawned asecond generation and, as theirwork grew increasingly decorative,they influenced artists making tap-estries, furniture, illustrated booksand other decorative objects.“Truth and Beauty” ends with agallery of those works, includingtwo beautiful tapestries, “Pomona”and “Flora” (1886-1920), designedby Edward Burne-Jones.

Nowadays, their work seems

San FranciscoIN 1848, more than a dozen yearsbefore artists in Paris rebelledagainst the French Academy tocreate Impressionism, William Hol-man Hunt, Dante Gabriel Rossettiand John Everett Millais—aged 21,20 and 19—launched a very differ-ent artistic revolt in London. De-riding the formulaic teachings ofthe Royal Academy and calling SirJoshua Reynolds, its revered firstpresident, “Sir Sloshua” to mockhis free, brushy, grand style ofpainting, the trio, plus four lesserlights, started a secret society toadvance a new aesthetic.

Calling themselves the Pre-Raphaelite Brotherhood, they fa-vored crystalline precision that be-trayed no signs of brush strokes,eschewed idealized figures anddramatic lighting, and subscribedto the critic John Ruskin’s instruc-tion to seek truth in nature. But as“Truth and Beauty: The Pre-Rapha-elites and the Old Masters” here atthe Legion of Honor demonstrates,they were in reality a bundle ofcontradictions and paradoxes.

Intent on creating somethingnovel, they nevertheless lookedback to myth and medieval litera-ture for subject matter or some-times simply invented nostalgicscenes, filling their paintings withsymbols and hoping they would beread like books. They believed inobserving nature but sometimesdepicted it in unnatural colors andflattened surfaces. In tune withtheir name, they sought to returnto the practices of artists who pre-ceded Raphael (1483-1520), butthey actually esteemed him, givinghim a place on their list of “Im-mortals” along with Michelangelo,Fra Angelico and Leonardo daVinci. It was the saccharine, pos-tured images of Raphael’s follow-ers that riled the Brotherhood, yetthey sometimes made sweet, over-ripe paintings themselves; andthey eventually came to emulatethe lush, stirring works of manyItalians who came after Raphael,like Veronese.

In fact, the founders had neverbeen to Italy or seen much medi-eval or early Renaissance Italianart in person when they began theBrotherhood. Their original inspi-ration, prompting their choice ofbold jewel-like colors and use ofsymbols, sprang from Netherland-ish artists like Jan van Eyck,

BY JUDITH H. DOBRZYNSKI

FINEARTS

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whose brilliant “The Arnolfini Por-trait” (1434) had been purchasedby the National Gallery in 1842,causing a sensation. (This winter,that museum devoted an entire ex-hibition to the impact of that onepainting on the Pre-Raphaelites.)

“Truth and Beauty” best con-veys these beginnings on a wall de-voted to Millais’s famed “Mariana”(1851), which alludes to a storytold by Shakespeare and Tennyson:Standing beside her velvet stool, at

an arched, stained-glass windowportraying the Annunciation, at-tired in a glowing, cobalt-bluedress, a weary Mariana yearns fordeath because she was rejected byher lover after her dowry was lostat sea. Autumn leaves and her un-finished embroidery convey themelancholic passage of time.Nearby is Van Eyck’s “The Annun-ciation” (c. 1434/36), with Mary ina blue dress before arched,stained-glass windows, a stool inthe foreground, along with a glori-ous 1450s Flemish prayer book bythe Master of the LlangattockHours and William Vrelant opened

anachronistic in a way that the OldMasters who animated them—orthe French Impressionists—neverwill be. The Pre-Raphaelites areboth loved and loathed. “Truthand Beauty” is unlikely to changemany minds about them, but itshould help visitors understand

them better.

Truth and Beauty: The Pre-Rapha-elites and the Old MastersLegion of Honor, through Sept. 30

Ms. Dobrzynski writes about thearts for many publications.

John Roddam Spencer Stanhope’s ‘Love and the Maiden’ (1877), top; JohnEverett Millais’s ‘Mariana’ (1851), above; Jan van Eyck’s ‘The Annunciation’ (c.1434/36), left; Dante Gabriel Rossetti’s ‘Veronica Veronese’ (1872), below

A14 | Monday, July 30, 2018 THEWALL STREET JOURNAL.

WeatherShown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.

City Hi Lo W Hi Lo W City Hi Lo W Hi Lo WToday Tomorrow Today Tomorrow

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Amsterdam 82 63 t 75 59 tAthens 89 75 pc 89 74 pcBaghdad 109 83 s 109 81 sBangkok 90 79 sh 90 79 shBeijing 94 78 s 96 78 sBerlin 90 68 pc 94 72 pcBrussels 84 64 pc 79 60 tBuenos Aires 58 35 s 54 36 sDubai 109 91 s 106 92 sDublin 65 50 pc 67 52 shEdinburgh 66 50 r 67 54 sh

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The contest answer is MAD DOCTOR. Each of fourAcross answers is a portmanteau word where oneor more letters were spliced out of the second part:MA from BRAIN/MANIACS; D from CELEB/DEBUTANTES; DOC fromMOCK/DOCUMENTARY;TOR from SHARK/TORNADO. The spliced-outletters spell the contest answer.

F I T J E L L O C O A C HA N O M A L O U S A L P H AB R A I N I A C S P A P A LL U S T N A I F Y E L LE S T E E M S E R B T I PS H Y V I M E R O I C A

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TheWSJ Daily Crossword | Edited by Mike Shenk

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Solve this puzzle online and discuss it atWSJ.com/Puzzles.

SQUEEZEPLAY | By Zhouqin Burnikel

ParisTeam Sky spends all year hon-

ing every possible detail to winthe Tour de France, the race thatis practically its raison d’être.

No detail is too small. Sky fa-mously studies hotels along theroute to know which ones have airconditioning and which ones don’t.It prepares custom bedsheets forthe riders. It invests millions insports science.

So it took the peloton by sur-prise halfway through this sum-mer’s Tour when, all of a sudden,the team that leaves no detail tochance didn’t even seem to knowwho its strongest rider was.

The expectation had alwaysbeen that it would be ChrisFroome, the four-time Tour cham-pion coming off a stunning, ifphysically taxing victory in theGiro d’Italia. At least, it was untilthe Tour reached the Alps. That’swhen his teammate, a 32-year-oldsupport rider from Wales namedGeraint Thomas took over theleader’s yellow jersey.

Froome, the most accomplishedstage racer of his generation, be-came a deluxe domestique. AndThomas, who had never won aGrand Tour, morphed into the Skyleader, all the way to victory onthe Champs-Elysées on Sunday.

“It’s incredible just to be sathere with this jersey. Insane,”Thomas said ahead of Sunday’sceremonial stage into Paris. “A bigthanks to Froomey…I appreciatehaving the best stage rider everriding for me.”

To understand how momentousTeam Sky’s internal reorderingwas, it’s important to understandhow cycling teams structure them-selves for a race like the Tour. Anysquad with real hopes of takingthe yellow jersey organizes itselfaround a leader, with the otherseven riders devoted to shieldingand pacing him so that he is asfresh as possible when the timecomes for a decisive attack.

For the past five years at Sky,that had always been Froome, eversince he took over from 2012 Tourde France champion Bradley Wig-gins. He became so dominant thathe set his sights on winning acomplete set of Grand Tours, afeat he managed over the past 12months. But his attempt to win theGiro d’Italia and the Tour deFrance five weeks later proved toomuch for him here.

Suddenly, Froome was the SuperBowl winning quarterback holdinga clipboard for his backup. And thebackup, the affable former trackspecialist who spends his free timewatching rugby, was left to pull offone of the most ostentatious Tourvictories in recent memory.

“I don’t think there’s a problemfor Chris, because in the end, it’shis legs,” said Sky sports directorNicolas Portal, the tactician behindthe team’s success. “You accept itmore easily when you feel that it’sa fair result. When you feel thatyou were beaten by the road.When you feel that the people infront of you were stronger.”

Thomas’s flawless race, fromstart to finish, saw him becomethe first man in 25 years to notchback-to-back stage wins in theAlps. Though he was unproven inthe third week of a Grand Tour, hesomehow had the legs to sprint forthe line in the Pyrenees. And heeven had a shot at winning Satur-day’s final time trial until Portaltold him to cool it toward the endand not take so many risks in thecorners.

Which wasn’t bad for a widelyunderestimated 32-year-old with areputation for crashing in crucialmoments.

“He was in the shape of hislife,” said Team Sunweb’s TomDumoulin, who finished second, 1minute and 51 seconds behindThomas. “He didn’t make anymistakes. He was never put intotrouble by anyone in the moun-

tains or on any stage.”Froome had to settle for the

third step on the podium. But eventhough he called it a “dream” tofinish third while supportingThomas, it was clear that Froomehad not had a fun Tour de France.

He was only cleared to race it inthe week before the start, follow-ing a nine-month investigation

into his abnormally high levels ofan asthma drug at last fall’s Vueltaa Espana. Then, once he showedup, he was booed mercilessly byfans on the French roadside. Oneeven tried to take a swing at himon the Alpe d’Huez.

“When there is negativity likethat, it brings us as a team closertogether,” Froome said. “You can

choose to let it get to you or youcan choose to let it motivate you.And for us it was a motivation.”

The headache now for the restof pro cycling is that Sky’s assem-bly line has somehow producedanother champion. The team hasnow won six of the past sevenTours with three different riders.

“It’s not too hard when youhave a team like this one,” Portalsaid. “The hardest thing is not tocrack under pressure.”

What this means for Sky’s inter-nal dynamics is a conundrum theteam will have to solve before nextsummer.

It would be unfair to say thatFroome’s time at the top is over,because Froome is still Froome,the winner of six Grand Tours whohappened to arrive in France ex-hausted and distracted. ButThomas has also proven he has theclass to take on anyone, especiallywith the Sky machine thrummingbehind him.

“That’s the strength of ourteam: we have really only onegoal,” Sky mountain domestiqueWout Poels said. “But you need alineup of very, very strong ridersto make a plan like that work. Yougo all in.”

BY JOSHUA ROBINSON

TOUR DE FRANCE

The Switcheroo ThatWon the TourGeraint Thomas was supposed to help support Chris Froome. Until Thomas proved he was the stronger rider for Team Sky.

Geraint Thomas didn’t begin the Tour as Team Sky’s top rider. Below, Thomas and Team Sky teammate Luke Rowe celebrate during Sunday’s final stage.

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DPRESS

SPORTS

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THEWALL STREET JOURNAL. Monday, July 30, 2018 | A15

LawyersAt Civil WarUncivil WarriorsBy Peter Charles Hoffer(Oxford, 228 pages, $27.95)

BOOKSHELF | By Harold Holzer

OPINION

T oward the end of the Civil War, a recently liberatedformer slave from Union-occupied New Orleansdemanded that her onetime owner be held accountable

for dividing her family. Rose Herera’s “mistress,” MaryDeHart, had shipped three of Herera’s young children toCuba before slavery was outlawed in Louisiana. Civil authori-ties could find no grounds to prosecute DeHart or order a19th-century version of family reunification. In steppedUnion Gen. Nathaniel Banks, a former attorney who com-manded Union forces in the Crescent City. In a stroke of in-terpretive genius, Banks discovered grounds for a differentruling by citing recently overturned slave laws, which hadforbidden owners from selling away children under 10. Thegeneral ordered DeHart to Cuba to retrieve Herera’s children.

That the Civil War transformed American jurisprudence inboth small and large ways is neither a novel nor disputedclaim. At its most fundamental level, Union victory meantthat African-Americans would no longer be treated asproperty. Eight months after Lee surrendered to Grant atAppomattox, involuntary servitude became unconstitutional.

Within a few years, amend-ments guaranteeing people ofcolor citizenship, civil rightsand voting rights were ratified.But if the law changed, lawyersdid not. They still thirsted forthe combat of interpretation andargumentation.

In “Uncivil Warriors: TheLawyers’ Civil War,” a startlinglyoriginal work of history, PeterCharles Hoffer traces how the warturned the legal worlds of theUnion and the Confederacy upsidedown. He closes his analysis with a

provocative chapter on the Reconstructionera, in which he suggests that both Northern and

Southern lawyers deserve enormous credit for hashing outthe details of dramatically altered statutes—earning big feesin the bargain.

Earlier legal histories have understandably focused on thestatutes. Mr. Hoffer, a professor of history at the Universityof Georgia, concentrates instead on the players who workedto change the law and the settings in which they did so, fromsecession conventions to courtrooms to military installations.War made it possible for old lawyers to make new law, aswhen Union Gen. Benjamin Butler—a former attorney laterknown as “Beast” to his Southern detractors—in 1861 found anovel and ingenious legal argument for sheltering the run-away slaves who flocked to his headquarters at Fort Monroe,Va. He declared them “contrabands of war,” or as they be-came known in the vernacular, “contrabands.” Butler single-handedly overturned the federal Fugitive Slave Act withouteven consulting his commander in chief, Mr. Hoffer writes,and “almost by accident” became “one of the first of thelawyer/politicians to formulate a policy” on slavery.

The principal wartime forum for hashing out new legalprecedents was Abraham Lincoln’s cabinet—more a team ofattorneys, Mr. Hoffer argues, than Doris Kearns Goodwin’steam of rivals. “Overall, one could not find a more able orimposing team of lawyers than this,” Mr. Hoffer asserts,

“though like many law partnerships, there was rivalry andcontention among themselves and with senior partnerLincoln.” During four years of military conflict, savvylawyer-politicians like William Seward, Salmon Chase, EdwinStanton and Edward Bates haggled over such cornerstonepolicies as the legality of the Union blockade of Confederateports, emancipation by executive order, the first militarydraft, and the suspension of the writ of habeas corpus, alongwith the use of military tribunals even where civil courtscontinued to operate. Cabinet members helped Lincolnmaneuver around the Constitution and elude oversight by aSupreme Court over which ancient, pro-slavery Chief JusticeRoger B. Taney presided until only months before theConfederacy was defeated. In 1864, Lincoln would appointChase to succeed Taney as chief justice.

Mr. Hoffer may occasionally treat the obvious as revela-tory: It should be no surprise that many politicians of theLincoln era—like politicians in most periods before andsince—had trained in the law and practiced at the bar beforelaunching careers in government. But the author treads newground when he explores the decisions made by lawyer-gen-erals like Butler, Joseph Holt and William T. Sherman, whoregarded all Rebels as “unregenerate law breakers.” Sher-man, he writes, “was always providing legalistic explana-tions” for his aggressive way of making war.

Readers will be studying, and debating, Mr. Hoffer’s uniquescholarship for years—and profiting handsomely. In his lastchapters, however, he strives a bit too hard to stake outdistinctive territory. At one point he derides Lincoln’s finalAnnual Message to Congress, in December 1864, for lacking“the sharp legal acumen of his First Inaugural, or the solemngravity of his Emancipation Proclamation. He was factual, butdid not rehearse the facts in an argumentative way.” Perhaps,Mr. Hoffer suggests, Lincoln had already “passed the mantle ofliberator to Chase and was simply relieved to have done so.” Infact, Lincoln had hardly surrendered that role, telling a visitorthat same year that he believed history would honor him for it.

Mr. Hoffer alternatively posits that, by late 1864, Lincoln’ssharpest writing was behind him: Reading that annualmessage, he says, “one senses that he was mentally andphysically near the end of his tether.” If so, Lincolnmiraculously recovered in time to craft his majestic SecondInaugural Address three months later, when he was arguablymore exhausted than ever. The president and othersconsidered this his greatest speech. Yet here, too, Mr. Hofferbreaks with traditional judgment: He declares the master-piece a failure because it departed from legal argumentationto stress God’s will over man’s law. Left unmentioned is thefact that Lincoln’s First Inaugural, however artful legally, hadleft seceding states unpersuaded and unreconciled. At leastthe Second Inaugural promised “peace among ourselves”—apath to reunification “with malice toward none.” Sometimesmoral arguments trump legal ones.

Mr. Holzer, director of the Roosevelt House Public PolicyInstitute at Hunter College, won the 2015 Gilder LehrmanLincoln Prize.

How federal and Confederate lawyersaddressed the conundrums of disunionand transformed American jurisprudence.

Get to Work, Senators

T his week a congressio-nal conference commit-tee gets to work resolv-

ing the differences betweenthe House and Senate ver-sions of the 2018 farm bill,which authorizes the federalfood-stamp program. Amongthe most contested issues willbe the work requirements forable-bodied, single adultspassed by the House. Republi-cans must stand up for fiscalresponsibility and the dignitythat comes with work.

I am deeply concerned forthe poor and vulnerable. I be-lieve in a social safety net forthose who are truly in need.Unfortunately, America’s cur-rent safety nets don’t alwayslive up to their promise orpurpose. Since 1965, the per-centage of working-age menoutside the labor force—thatis, men who are neither work-ing nor seeking work—has

more than tripled, rising from3.3% to 11.6%. If we reallywant to combat poverty, weshould evaluate how success-ful our social programs are atmoving people off public as-sistance—not how many stayon. The Democrats’ preferredwelfare strategy encouragesdependency on government.

The GOP would like to seewelfare recipients becomeself-sustaining workers. Thereason is simple: Work af-firms human dignity.

American Enterprise Insti-tute President Arthur Brookspoints out that men who with-draw from the labor force of-ten retreat from other socialinstitutions. According to AEI

scholar Nicholas Eberstadt,two-thirds of men outside thelabor force are unmarried. De-spite being unemployed andhaving ample free time, theyare no likelier to volunteer,participate in religious activi-ties, or care for family mem-bers than men with full-timejobs. There’s also a connectionbetween welfare and the opi-oid crisis.

Work requirements areamong the simplest ways tohelp Americans on welfarelearn to help themselves. Toreceive benefits under theHouse version of the farm bill,an able-bodied food-stamp re-cipient between 18 and 59without dependent childrenwould need to work or be en-rolled in a job-training pro-gram for 20 hours a week.Even a part-time attachmentto the labor market is impor-tant because it allows welfarerecipients to gain experienceand fill out their résumés.

The House bill’s provisionsare popular. The Foundationfor Government Accountabil-ity found that 83% of Ameri-cans support “requiring able-bodied, working-age adults towork or participate in a jobtraining program at leastpart-time in order to receivefood stamps.” Work require-ments in exchange for welfarewill also save money. TheHouse-passed bill would re-duce federal spending bymore than $20 billion overthe next decade without tak-ing a penny away from thosewho need it most.

The senators in the confer-ence committee can do theright thing for the deservingpoor and taxpayers by pre-serving the work require-ments for welfare in the finalversion of the 2018 farm bill.

Mr. Brat, a Republican,represents Virginia’s SeventhCongressional District.

By Dave Brat

The House farm billwould discourage foodstamp dependency.

Andrés Ma-nuel LópezObrador andhis Morenaparty won bigin thismonth’s Mexi-can presiden-tial electionsby promisingto drain theswamp. But

they’re already engulfed in ascandal rivaling the misdeedsthat put the Institutional Rev-olutionary Party (PRI) in suchbad odor.

It’s the job of Mexico’s elec-toral watchdog, known as theNational Electoral Institute orINE, to keep political partiesfrom buying votes. On July 18INE announced that Morenabroke the rules when it set upa charitable fund ostensibly tosupport victims of the Sep-tember 2017 Mexico Cityearthquake.

Morena didn’t report theformation of “Por lo demás”(in English, “For everyoneelse”) to electoral authoritieseven though it was clearly aparty project. The trust wasdomiciled at the Morena head-quarters. Out of 58 trusteeswho contributed to it, 49 wereMorena congressmen.

It gets worse: Video cam-eras recorded a carousel ofpeople going in and out ofseveral bank branches andmaking cash deposits to thefund. The multiple transac-tions were apparently neces-sary to avoid crossing the le-gal threshold for cash deposits

Corruption in Mexico’s Anticorruption Partyabove which a bank is re-quired to learn the source ofthe money. This rule is inplace to police money launder-ing, a problem Mr. López Ob-rador ought to be interestedin given his campaign pledgeto defeat drug-cartel violence.

Some 44 million pesos($2.3 million), more than halfthe money raised by the trust,was deposited in cash. On thespending side, most of themoney seems to have gone toMorena party members via ca-shier’s checks. Morena saysthe money was then used tohelp earthquake victims, butINE says it hasn’t been able toverify that. Even if true, itwould violate campaign-fi-nance laws.

INE has fined Morena 197million pesos (roughly $10.5million). The election watch-dog’s board voted 10-1 in fa-vor of the fine, and its allega-tion can be backed up withhard evidence, including bankdeposit slips and the videofootage.

The PRI, National ActionParty (PAN) and Green Partyalso have been fined for viola-tions during the campaign.Their penalties weren’t asharsh as those leveled on Mo-rena, but their sins were con-sidered less egregious. It’sworth noting that Morena’sfine is only the fifth-largesthanded down by an indepen-dent electoral body in Mexicosince the return to democracyin 2000.

A statesmanlike responsefrom Mr. López Obrador

would have offered a clear ex-planation—presuming he hasone—or an apology, and an ac-knowledgment that the INE isdoing its job. Instead he hasreacted with righteous indig-nation and fury.

He hasn’t addressed themerits of the charges, thoughMorena says it did not breakthe law and that it will appealthe decision. He claims he andhis party are targets of a po-litical hit job and that the gov-ernment of President EnriquePeña Nieto, of the PRI, is be-hind it.

Primarily he has lashed outat the INE board, calling itsdecision “without rigor, with-out seriousness, without legal-ity,” and said it is instead “anexcess, an abuse, a vile re-venge.” Other culprits in hisview include the Finance Min-istry, conservatives and cer-tain media outlets. “I forgivebut I don’t forget,” he said, inwhat sounded like a veiledthreat against anyone not withhim on the matter.

On Tuesday INE PresidentLorenzo Cordova released astatement emphasizing thathis team wasn’t able to ascer-tain how Por lo demás re-sources were used and that, as

a result, there is nothing in itsfindings that “questions inany way the result of thiselection.”

Mr. López Obrador wouldlikely have been angry evenhad the fine been smaller. Hewon the election with a hugemargin over PAN candidate Ri-cardo Anaya. But he undoubt-edly understands that he isstill viewed skeptically by mil-lions of Mexicans.

The election results postedby INE show that while Mr.López Obrador won all butone state on July 1, voter turn-out in the modernizing north-ern states was significantlylower than elsewhere. His bigscore came in southern Mex-ico and in Mexico City, whichis heavily populated and chockfull of government employees.As a former mayor of the capi-tal, he has a strong politicalapparatus there.

Many Mexicans see Mr. Ló-pez Obrador as a PRI dinosaurwho founded a new party, oneto which a good number ofother old PRIistas adhered inthe latest election. The “chari-table” funding scheme built oncash transactions to avoid apaper trail does little to dis-abuse them of that idea.

Mr. López Obrador loyalistsmay believe he is a victim.The rest of the nation has tohope that the institutional in-dependence that allowed theINE to discipline a president-elect’s party for breaking thelaw can hold up over his six-year term.

Write to O’Grady@wsj.com.

Electoral officials fineAMLO’s Morena$10.5 million forcampaign violations.

AMERICASBy MaryAnastasiaO’Grady

Earlier thisyear morethan 3,000Google em-p l o y e e ssigned a letterto chief exec-utive SundarPichai de-manding thecompany haltwork on the

Defense Department’s ProjectMaven, which applies algo-rithms to warfare. The dis-gruntled employees alsowanted their boss to pledge“that neither Google nor itscontractors will ever buildwarfare technology.” In Junethe company announced itwould not renew its ProjectMaven contract. This is in-credibly shortsighted and willincrease the likelihood of warand civilian deaths.

Past warfare was de-scribed primarily by tonnageand throw weights, becauseprecision was almost nonex-istent. But ever since hu-mans started droppingbombs out of airplanes,they’ve been aiming formore precision.

On June 15, 1944, a squad-ron of 75 American Super-fortress B-29s left China todestroy the Imperial Ironand Steel Works in Yawata,Japan. The site manufac-tured about a quarter of Jap-anese steel at the time. The47 bombers that made it toYawata dropped more than365 bombs. One accidentallydestroyed a power housemore than a kilometer awayfrom the complex. The restmissed.

It wasn’t for lack of trying.In 1943, behavioral scientist

Better Bombs Save LivesB.F. Skinner demonstratednew guidance technology totrack simulated Japanese de-stroyers. He then revealedthat inside the nose cone ofthe bomb were three pigeonstrained to peck away at sil-houettes of Japanese war-ships. But real technology ad-vances. Wartime news reportsclaimed the highly complexNorden bombsight could hit apickle barrel from 20,000 feetabove. But in 1944 bombar-diers recorded that “75% ofNorden bombsights fell shortof specifications,” missing bymore than 300 feet.

For the rest of the war,the city of Yawata was fire-bombed in an unsuccessfulcampaign to destroy the ironand steel works. Notably, itwas a target on Aug. 9, 1945,three days after Little Boywas dropped on Hiroshima. AB-29 carrying the atomicbomb Fat Man made runsover Yawata, but thick smokefrom the ground made tar-geting impossible, and thebombers headed to the nexttarget on the list, the Mit-subishi Steel and ArmsWorks in Nagasaki. The bom-bardier, Capt. Kermit Beahan,used a Norden bombsight totarget the factory. He wasn’teven close—off by almosttwo miles. Horseshoes andhand grenades!

During the Cold War, theU.S. and Russia often negoti-ated over throw weight, thepayload that a missile car-ries—power over precision.In hot wars, conventionalbombing continued. The U.S.dropped seven million tonsof bombs during the VietnamWar, 10 times as much asduring the Korean War and

twice as much as the Alliesdropped in World War II.There are no good statistics,but most think more than90% of bombs missed acrossthose wars.

During the first Gulf War,the paradigm changed. Toma-hawk cruise missiles wouldread the terrain preloadedfrom satellite imagery and ac-curately find their targets.Even aerial bombing im-proved. Some 17,000 precisionbombs, mostly laser-guided,

almost always hit their tar-gets. But 210,000 conven-tional bombs still missed byan average of 300 feet.

By the late 1990s, theJoint Direct Attack Munitionkit was developed. It wasbolted onto conventional500-pound bombs, which up-dated their position via GPSas they dropped. They al-most always landed within10 feet of their target. It wasfirst used in Kosovo in 1999and perfected in the IraqWar.

There is so much more todo. The Israelis successfullydeploy the Iron Dome missileinterceptor. They claim it is90% accurate, but many dis-pute this. Last week a newinterceptor, known as David’sSling, co-developed with Ray-theon, was launched againsttwo Syrian SS-21 Tochka mis-siles headed toward Israel.

Neither missile interceptorhit its target.

Precise weapons set ex-pectations that war can befought without civilian casu-alties. Which brings us backto Google. The U.S. has useddrones successfully against alQaeda and Islamic State.Drone pilots identify andeliminate terrorists fromthousands of miles away. Col-lateral damage and civiliandeaths still happen, butthey’re often the result offaulty intelligence, not thebombing technology.

Project Maven, or the Al-gorithmic Warfare Cross-Function Team, was set upby the Defense Departmentlast year. Working with pri-vate industry, the group ap-plies machine learning andartificial intelligence to readdrone footage and “autono-mously extract objects of in-terest from moving and stillimagery.” This probablydoesn’t include facial recog-nition. It eventually will.

I don’t think we’ll ever getto fully autonomous weap-ons, the fever dreams of Ter-minator’s Cyberdyne Systemsand the Campaign to StopKiller Robots. Treaties willbe signed to outlaw them.

Still, it’s naive to thinkwar is obsolete—bad actorswill always be around. Buttechnology will soon surgi-cally zap bad guys. ProjectMaven gets us closer. Whichis why Google engineers’ re-fusal to develop precisiontechnology means more civil-ians will die or the militarywill be reluctant to use force.That’s wrong. They shouldGoogle Si vis pacem, parabellum.

If Google can makedrones more accurate,everyone benefitsexcept the bad guys.

INSIDEVIEWBy AndyKessler

A16 | Monday, July 30, 2018 THEWALL STREET JOURNAL.

Some Victories, but the Left Dominates LawJason Willick’s “The Weekend In-

terview With Steven Teles: HowConservatives Won the Law” (July21) is an excellent analysis of thecurrent dominance of conservativelegal thought. However, it is morerevealing to look at how groups likethe Federalist Society reached thisposition.

The Federalist Society didn’t ob-tain its level of influence through adhominem attacks or questionabletactics. Rather, it did so by promot-ing debates that demonstrated howliberal and conservative legal theo-ries held up under scrutiny.

At my law school, the FederalistSociety constantly put on debateswhile left-leaning organizations suchas the ACLU never did. This demon-strates the relative confidence thesegroups have in their positions.

The interview mentions howgroups like the Federalist Society“dethrone[d] liberalism from itsdominant position in legal thought.”But more importantly, it did so byallowing others to discover that ithas the better legal theory.

MICHAEL CONKLINColorado Mesa University

Grand Junction, Colo.

Let’s look at some facts: Accord-ing to Georgetown Law Center’sProf. Nicholas Quinn Rosenkranz’sknowledge, the law school hasthree conservatives on its 120-member faculty; Iowa Secretary ofState voter registration shows thatmy alma mater, the Iowa College ofLaw, has one Republican on its 50-member faculty and Yale LawSchool is reported to have zero—yes, zero—professors who take the

pro-life position. Profs. JamesLindgren and James Phillips havepublished data showing empiricallythat virtually all “elite” law schools(from which so many judges come)share this same political profile,called by Mr. Rosenkranz, “not justleft of center, but closer to the leftedge of the Democratic Party.” Headds: “Many are further left thanthat.”

And this interview says conserva-tives “won” the law?

Kudos to the Federalist Societyfor grooming an alternative intellec-tual culture here, but given theabove, the claim of conservative vic-tory in law is preposterous.

You cannot get healthy fish fromthese contaminated waters.

Until and unless some real bal-ance is restored to our institutionsof higher and legal education, wecan expect a continued leftwardmarch from our courts, which aresimply doing the bidding of our ide-ological law schools, where the radi-cal is made mainstream and themainstream is made marginal.

TERESA R. MANNINGRoanoke, Va.

It’s certainly true that “conserva-tives need more Federalist Societiesand fewer [affirmative-action] bakesales.” But, it’s the latter that inlarge part informed the voters whoelected Donald Trump. And, withoutMr. Trump as president, there wouldbe no discussion of any conservativemajority on the Supreme Court, thevaluable work of the Federalist Soci-ety notwithstanding.

HERBERT SOROCKLake Geneva, Wis.

LETTERS TO THE EDITOR

Letters intended for publication shouldbe addressed to: The Editor, 1211 Avenueof the Americas, New York, NY 10036,or emailed to wsj.ltrs@wsj.com. Pleaseinclude your city and state. All lettersare subject to editing, and unpublishedletters can be neither acknowledged norreturned. “I came here to lose myself.”

THEWALL STREET JOURNAL

The Realtors Support Flood-Insurance ReformRegarding your editorial “Hurri-

cane Scalise” (July 21): The NationalFlood Insurance Program (NFIP) hasbeen renewed 41 times since 1998,with six short-term extensions com-ing in the past year. You overlookthat the National Association of Real-tors has been a vocal supporter ofcomprehensive reforms to the NFIP,both during this and previous exten-sion bills.

Realtors publicly spoke out last fallin support of the 21st Century FloodReform Act, specifically advocatingfor reforms to gradually phase outNFIP subsidies; better align rates torisk, particularly for inland andlower-value properties and addressrepeatedly flooding properties, whichaccount for 2% of NFIP policies but25% of claim payments.

Current law calls for subsidies forhigh-risk properties to be phased outentirely, a policy which has been pub-licly supported by the NAR andwould be accelerated under the 21st

Century Flood Reform Act. The billpassed the House but is stalled in theSenate.

We have never used the words “in-alienable human right” to character-ize flood-insurance subsidies. On thecontrary, one of our reform principlesstates, “Premiums should be more ac-curately priced to the property spe-cific risk, but any rate increasesshould be gradual and phased in overmany years.” We have and will con-tinue to stand firm in our support ofthe NFIP’s ability to protect currentand future generations of U.S. prop-erty owners.

We recognize those protectionswill vanish if the program remains onits current path. That’s why we willcontinue fighting for sustainable re-forms as the next NFIP reauthoriza-tion discussions loom later this year.

ELIZABETH MENDENHALLPresident

National Association of RealtorsWashington

Pepper ...And Salt

Oil Pipeline Purpose Is to Block Electric CarsIn your July 23 editorial “Standing

Rock Redux” the editorial boardshows it is stuck in old ways of think-ing about oil transportation.

Line 3 isn’t a replacement project.Enbridge Energy is expanding Line 3,even though Minnesota’s limited re-finery capacity is maxed out. That’sthe conclusion of Minnesota’s Depart-ment of Commerce, hardly an “ex-treme environmentalist” agency.

Enbridge’s track record is check-ered, with over 800 spills between1999 and 2010. Most tragically, En-bridge spilled around one million gal-lons of tar-sands oil into Michigan’sKalamazoo River in 2010. It took over

$1 billion and a half decade to cleanit up. That risk may be acceptable tothe editorial board, but it isn’t fair toMinnesotans.

Line 3 is a lifeline to an industrystruggling to justify itself. As recentlyas 2016, Alberta tar-sands crude soldfor $20 per barrel. And with railtransportation costing $6 per barrelmore, the motivation for the expan-sion is clear: It’s about easy profitsfor Enbridge, not safety.

Enbridge is slowing down a transi-tion to electric vehicles by floodingthe market with cheap, surplus tar-sands crude. As a report from WoodMackenzie put it, “for oil producers,the threat of [electric vehicles] is ex-istential.”

Meanwhile, renewable power inMinnesota is booming—with a 48.6%increase in solar jobs in 2017, accord-ing to the Solar Jobs Census. Theseare real opportunities for people dis-placed by a changing economy. Incontrast, Line 3 would only create 20permanent jobs.

Enbridge has convinced our PublicUtilities Commission that Minnesotaneeds Line 3. The rest of us won’t beso easily mislead.

TIM SCHAEFERDirector, Environment Minnesota

Minneapolis

Facebook Robots: TurningThe Turing Test on Its Head

Yoram Hazony should be reassuredto learn that the wrath of Facebook’srobot customer service isn’t reservedfor political matters (“Why DoesFacebook Think I’m ‘Political’?,” op-ed, July 26). I once tried to changethe name of a Facebook page Iowned and gave up after submittingthree carefully written appeals andreceiving word for word the same re-jection message every time, eachsupposedly signed by a different “hu-man” agent.

In the field of computer science,one of the great unsolved problemsis to pass the Turing Test by build-ing a robot so advanced as to be in-distinguishable from a human. Face-book has apparently decided toapproach the problem from the op-posite direction, and I’d like to con-gratulate it on solving the TuringTest by training its customer-serviceagents so rigidly as to be indistin-guishable from robots.

ALAN JAFFE, SOFTWARE ENGINEERChicago

Calling Judge Kavanaugh

O ne exciting prospect for a SupremeCourt that may soon include Brett Ka-vanaugh and Neil Gorsuch is reining in

the excesses of the administra-tive state. The Fifth CircuitCourt of Appeals this monthteedup apotential early block-buster by ruling that the Fed-eral Housing Finance Agency(FHFA) is unconstitutional.

Congress established the FHFA in 2008 tooversee FannieMae and FreddieMac as the twogovernment-sponsored mortgage giants ca-reened toward insolvency. Given that themod-ern regulatory state has grown like kudzu, no-body in Congress or the Bush Administrationgave the FHFA’s structure a second thought.Wemissed it too.

But inCollins v.Mnuchin, a three-judge panelof theFifthCircuit cited several features of FHFAat oddswith the President’s Article II powers inthe Constitution. “We hold that Congress insu-lated the FHFA to the pointwhere the ExecutiveBranch cannot control the FHFA or hold it ac-countable,” wrote the court.

The judges argued that several parts of theFHFA lawwork together to frustrate presidentialoversight. These include the limits Congress im-posedon aPresident’s ability to fire the director,who has a five-year term and is now formerDemocratic CongressmanMelWatt; the exemp-tion of the agency from the normal Congressio-nal appropriations process for funding; and thelack of a formalmechanism for the executive tocontrol the FHFA.

TheCongressional fundingpoint is especiallynotable. The FHFA is funded by the assessmentsit imposes on Fannie and Freddie, not by Con-gressional appropriations.

“If the agency is subject to the normal appro-priations process, the President can veto aspending bill containing appropriations for theagency. Also, the President submits an annualbudget to Congress, which he uses ‘to influencethe policies of independent agencies,’ ” wrotethe court. “The FHFA stands outside the bud-get—in contrast to ‘nearly all other administra-tive agencies’—and is therefore immune frompresidential control.”

This is terrific stuff, and the key point is dem-ocratic accountability. IfMelWatt is effectivelyinsulated from control by an elected President,

he answers to no one but him-self. This is contrary to theseparation of powers thatwasdesigned to insure political ac-countability.

As it happens, this is alsosimilar to the logic that Judge

Kavanaugh applied to the Consumer FinancialProtectionBureau (CFPB) in his 2016 opinion forthe D.C. Circuit Court of Appeals. Judge Ka-vanaughwas overturned in an en banc opiniondominatedbyObamaappointees. But hemaygetthe last judgment if the Senate confirmshimandeither the FHFA or CFPB cases make their wayto the High Court.

Recall that as a consultant to the Treasury,ElizabethWarren also designed the CFPB to beinsulated from Congressional appropriationswith automatic funding from the Federal Re-serve. Both the financial and housing bureauscould end up on the constitutional scrap heapwhen the right cases advance.

One irony ofCollins v.Mnuchin is that it wasbrought by FannieMae and FreddieMac inves-tors to overturn the 2012 decision by theObamaTreasury to sweep all Fannie andFreddie profitsfor the government. The constitutional argu-ment was almost an afterthought.

Two of the three Fifth Circuit judges ruledthat the FHFAprofit sweepwas legal under thecongressional statute. New Fifth Circuit judgeDon Willett agreed with his two colleagues onthe constitutional issues but wrote a spiriteddissent on the legality of the sweep that mayalso make it to the Supreme Court.

Aswewrotewhen hewas nominated, JudgeKavanaughandJusticeGorsucharepart of a newgeneration of judges who want to restore theConstitution’s original understandingof the sep-aration of powers. In particular they are lesslikely to defer to regulators who rewrite lawswithout proper statutory authority. And theymaybemorewilling to strike downagencies thatcan’t be controlled by the President. Thanks tothe Fifth Circuit, wemay soon get a lesson anewin James Madison’s genius.

The Fifth Circuit teesup a major separation

of powers case.

The GOP’s Clean Bills of Health Savings

T he Senate plans to stay in Washingtonfor August this year, and here’s an ideato keep busy: Pass some House health-

care reforms that are modestimprovements even Demo-crats should like.

The House last weekpassed a set of bills that in-cluded changes in Health Sav-ings Accounts, or HSAs,which are tax preferred accounts that allowindividuals to save for future medical ex-penses. More than 20 million people haveHSAs, which Congress created in 2003, but ar-bitrary restrictions cramp enrollment.

For one, a person has to be on a plan witha high deductible. A plan can’t cover certainservices below the deductible like telemedi-cine or diabetic test strips, which can savecosts over time. HSA money also can’t buyover-the-counter medicine, which is oftencheaper than prescription drugs.

HSAs tend to be concentrated in the em-ployer-sponsored or large group market,where insurance is likely to be available andcomprehensive. But in the individual marketless than 30% of ObamaCare plans are compat-ible with a health-savings account, accordingto an analysis from health consultant RoyRamthun. The rest have deductibles too low(13.7%) or out-of-pocket maximums too high(56.6%) to comport with restrictions.

The House bills would allowmore flexibilityin HSA-plan benefits, raise contribution limits,among other tweaks like allowing over-the-counter drug purchases. If the House wantedto be more ambitious, it would allow any planbelow, say, 70% actuarial value to be pairedwith an HSA.

The House last week also voted to delay

ObamaCare’s health-insurance tax and movedto repeal the medical device tax. It appearsthe House will wait until the fall to consider

delaying again the pain ofanother ObamaCare levy—the 40% “Cadillac tax” on ex-pensive plans. Legislation tokill it has some 300 co-spon-sors, and the question iswhat’s precluding that bill

from becoming law.One reason is criticism from some on the

right who like the Cadillac tax as a way to re-duce the tax advantage for employer-sponsoredinsurance over individual insurance. But it isn’tprogress to compound one bad policy (a taxcarve out) with another (an excise tax). Whyshould politicians decide how much coverageis too generous? The better policy would be toreduce the tax exclusion for employer plans,which some Members of the Freedom Caucusblocked as part of ObamaCare repeal.

Many of these health-savings bills are bi-partisan, though Senate prospects are uncer-tain. Democrats think high-deductible insur-ance is too stingy, which is ironic sinceObamaCare has driven Americans into high-deductible insurance as other options becomeless affordable. Even Senator Elizabeth War-ren wants to kill the medical device tax, sinceMassachusetts is home to device makers. Andany Democrat who wants lower premiumsnext year should support a delay in the directtax on premiums that insurers pass along toconsumers.

Then again, Democrats may want to prolongpremium pain so Republicans are blamed inthe fall. The GOP should nonetheless pressahead with floor votes in August to show whosupports better insurance options.

Modest improvementsin HSAs deserve

votes in the Senate.

High and Dry in Pasadena

A s a rare municipality with a AAA ratingfromS&PGlobal, Pasadena is an oasis offinancial stability in California. Yet the

city declared a fiscal emer-gency earlier this year, and thereason is a sign of the progres-sive times.

In 1978 and 1996, Califor-nians approved two amend-ments to the state constitutionto limitmunicipal authority to raise taxes.Amongotherrestrictions,Prop. 13 requires thesupportoftwo-thirdsofvoters toraise taxes foraspecific lo-calprogramorproject.UnderProp.218,newtaxescan be proposed only during general electionswhen the city council is also up for a vote.

But there’s a loophole. “In cases of emergencydeclared by a unanimous vote of the governingbody,” Prop. 218 says, cities can ignore the tim-ing restrictions. AndCalifornia lets local leadersdeterminewhat constitutes a fiscal emergency.Under that flexible definition, cities canproposetaxes whenever they want while still followingthe letter of Prop. 218.

In the last decade, more than 50 Californiacities have declared fiscal emergencies. Manyare questionable and look to be excuses for newtaxes. Recent examples includeMoraga, whichhad a AA+ rating at the time, and Santa Cruz,

whichhas declared a series of fiscal emergencieseven as its bond ratings improved.

Pasadena has seized on this loophole to cashin on the taxation of legalmar-ijuana. Pot became legal in thestate this year, and the CityCouncil didn’twantmarijuanaproponents to get before vot-ers first with a ballotmeasureon its local sale, regulation or

taxation. On Feb. 26 the City Council unani-mously voted to declare a fiscal emergency fora special municipal election “in order that theCity may propose, and the City voter may con-sider,” adopting a cannabis business tax.

Pasadenans lastmonth followed through andvoted to allow commercial cannabis businessesto operate legallywithin the city and to imposenewmarijuana taxes. The levywill raise asmuchas $2.1million annually. Not that city councilorsare sated.

This month they proposed raising the citysales tax to 10.25% from 9.5%. The Novemberelection is a general one, so no fiscal emergencyneeded. But if voters approve that regressivelevy, it would put Pasadena’s sales tax on parwith Chicago’s highest rate in the nation. Keepthis up and Pasadena’s politicians may talkthemselves into a real fiscal crisis.

California cities gamefiscal emergenciesto raise taxes.

REVIEW & OUTLOOK

OPINION

THEWALL STREET JOURNAL. Monday, July 30, 2018 | A17

T he White House announcedlast week that PresidentTrump was considering re-voking the security clear-ances of six former intelli-

gence officials. Law and policysupport such revocations, but as theswift and negative reaction in Wash-ington showed, the president musttake a nuanced approach.

The legal framework for securityclearances was charted by a 1988 Su-preme Court decision, Department ofthe Navy v. Egan. The justices notedthat a president has absolute power togrant, deny or revoke access to classi-fied information. This authority is in-herent in his role as commander inchief. The court ruled that the presi-dent could form due-process proce-dures for challenging an adverse deci-sion—which President Eisenhowerfirst did in 1960—but no appeal wouldbe available through the courts.

A body of law and policy hassince developed around several keyideas: First, a security clearanceshould be granted or continued onlyif it is “clearly consistent with theinterests of national security.” Sec-ond, security clearance places an in-dividual into a fiduciary relationshipwith the government. Third, authori-zation of access to classified infor-mation must be joined with a dem-onstrated “need to know.” Thesewidely accepted principles haveweathered the passage of time andthe scrutiny of Republican and Dem-ocratic administrations. That’s be-cause they form sound, nonpartisanpolicy that furthers the interests ofnational security.

Preferential treatment forformer officials doesn’timprove national security.It creates a caste system.

OPINION

Tax CutsBust ‘SecularStagnation’

By Mike Solon

A re low taxes key to a boomingeconomy? Their success isharder than ever to deny after

Friday’s report that the U.S. economygrew 4.1% in the second quarter,bringing the average quarterlygrowth rate during the Trump presi-dency to 2.9%. This explosive growth,and the accompanying spikes in hir-ing and wages, should finally dis-credit three popular claims made byopponents of the president’s policies:that tax cuts would blow a hole inthe deficit, that corporate tax cutswould serve only rich investors, andthat secular stagnation was a validexcuse for the slow growth of theObama era.

In the first five quarters of theTrump presidency, growth has beenalmost 40% higher than the averagerate during the Obama years, and percapita growth in gross domesticproduct has been 63% faster. Asusual, the largest single beneficiary

of faster growth is the government.The Congressional Budget Office re-ports that faster growth under Presi-dent Trump has already added $1.3trillion to the 10-year federal revenueprojection, with the CBO’s April eco-nomic adjustment alone showing anaddition of $1.1 trillion—the singlelargest growth-driven revenue gainever reported. State and local gov-ernments can anticipate a similardividend, amounting to as much as$600 billion.

The CBO now projects that addi-tional revenue from this economicsurge will offset 88.2% of the esti-mated 10-year cost of the tax cut.That contrasts sharply with theCBO’s assessment that PresidentObama’s economic slump lost $3.2trillion in projected 10-year revenuesduring his last three years—almostfive times more revenue lost thanwas gained by his 2013 tax hike.These results have confirmed againthat weak growth is the fastest wayto lose revenue and strong growth isthe fastest way to raise it.

The revenue trend shows that theTax Cuts and Jobs Act was fiscallyconservative as a tax cut but eco-nomically powerful as tax reform, asaccelerating growth appears likely tocover its cost and more. Even betternews is that the public revenuewindfall comes not as a drag ongrowth but as a slice of larger gains.The CBO’s April revision projected anextra $6.1 trillion in GDP over thenext decade—more than $18,000 ofgrowth for every man, woman andchild in America.

The next popular myth undone bythe growth renaissance is that corpo-rate tax cuts benefit only rich share-holders. Since the tax cut, the LaborDepartment reports that worker bo-nuses have hit the highest level everrecorded. The Commerce Departmentreports that wages and salaries aregrowing almost 25% faster underPresident Trump than under Mr.Obama. The recent tidal wave of cus-tomer rebates from utilities and cablecompanies also exposes the massiveburden that high corporate taxes hadbeen imposing on consumers.

The stock-market boom spurred bytax reform helps the middle class, too.A 2016 study in Tax Notes found thatabout 50% of all domestically ownedcorporate shares are in individual re-tirement accounts and pensionplans—the nest eggs of workingAmericans. Another 17.6% of sharesare held by nonprofits and life-insur-ance companies. Record dividends andbuybacks could see total shareholderreturns this year exceed $1 trillion,with the majority flowing to retireesor charities like United Way.

Perhaps the most important nar-rative discredited by the economicrevival is the “secular stagnation”excuse. Throughout the Obamayears, progressive economists saidAmericans had become too old, lazyand complacent to achieve thegrowth that was regular before 2009.But somehow American workersovercame all of these supposedweaknesses when Mr. Trumpchanged federal policy. The problemwas not our people but our govern-ment. Stagnation is not fate but apolitical choice.

With any luck, the economic turn-around will bring the pro-growthwing of the Democratic Party out ofhiding. Three times in the postwarera, Congressional Democrats joinedPresidents Kennedy, Reagan andClinton to cut taxes and enablegrowth. America could use that kindof bipartisanship again.

Mr. Solon, a former policy adviserto Sen. Mitch McConnell, is a partnerat US Policy Metrics.

Progressive economists saidgrowth was gone for good.Then Trump changed policy.

Trump Is Right About Clearances

At some indiscernible point, a spe-cial carve-out of the “need to know”principle developed for those at thetop. The idea was that senior adminis-tration officials should be allowed toretain their security clearances afterleaving government so they could con-sult with successors as necessary.That makes sense for a brief, definedperiod. But more than 20months afterthe election—with Obama and Trumpofficials in a daily cable-news cagefight—what are the odds that currentadministration officials consult withtheir predecessors on anything?

President Obama formalized thepractice for top former officials in a2009 executive order, but he re-stricted access to documents theyoriginated, reviewed, signed or re-ceived during their government ser-vice. That limiting instruction hasbeen all but ignored, according to re-cent public comments by former As-sistant Defense Secretary Mary BethLong. Instead, a practice of “profes-sional courtesy” allows a select fewformer officials to continue receivingfinished intelligence products andbriefings from their agencies long af-ter parting ways. Former Director ofNational Intelligence James Clapperall but confirmed the practice when

he recently acknowledged, “I don’tget the briefings.”

It’s hard to argue with courtesy,but security clearance is meant to bea tool for temporarily serving theAmerican people, not a portablefringe benefit for intelligence offi-cers. Indefinite security-clearance re-tention creates a castelike system:The political elite are buoyed by thelegitimacy and knowledge conferredupon them by continued access tothe nation’s most closely guarded se-crets. How does this serve the pub-lic? More important, at what pointdoes such an arrangement cease tolook like a fiduciary relationship andbegin to look more like a shadowgovernment?

Yes, the White House targetingsome of its most vocal critics for se-curity clearance review looks bad.But the president has legitimatepoints about the monetization ofclassified knowledge and the extentto which the practice is no longerconsistent with the interests of na-tional security.

The men singled out by Mr. Trumpare not the intelligence officials ofyesteryear: studiously apolitical pa-triots who shunned the spotlight andretired to pursue other endeavors.

John Brennan, Michael Hayden andJames Clapper have all obtained rolesas paid television pundits. JamesComey is aggressively hawking his“tell-all” book, although he claims tohave relinquished his clearance upondeparting government.

Mr. Brennan, accused by Republi-cans of leaking information designedto harm then-candidate Trump duringthe 2016 election, is an unabashedlypolitical actor and a prime example ofthis disturbing digression from princi-ple. The former CIA director regularlyissues hyperpartisan tweets, includingone recently accusing the president of“treason.” The fact that PresidentObama trusted Mr. Brennan does notrequire President Trump to do thesame. This is why the U.S. regularlyholds elections.

Nonetheless, Mr. Trump shouldnot punitively single out formerObama officials for security clearancerevocation, as doing so would affordthem a right to certain protectionsunder the existing executive order,including a formal hearing. Thatwould place the White House in a no-win situation: Deviate from decadesof policy by dispensing with due pro-cess—a decision within presidentialpurview but one that will be per-ceived as political—or provide thoselike Mr. Brennan a platform for fur-ther grandstanding.

There is an easier and significantlyless controversial way to address thisissue. Each year countless security-clearance holders leave their jobs andsee their access to classified informa-tion administratively canceled be-cause they no longer possess a bonafide “need to know.” In lieu of puni-tively revoking the security clear-ances of senior Obama administra-tion officials, the president shouldsimply order an end to the preferen-tial treatment they have been af-forded and allow their clearances tolapse—like everyone else’s.

Mr. Bigley is a national-securityattorney and a partner at Bigley Ran-ish LLP.

By Sean Bigley

TOM

WILLIAMS/CQROLL

CALL

Former CIA Director John Brennan testifies on Capitol Hill, May 23, 2017.

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The Tax-and-Spend Health-Care Solution

W hy is paying for health caresuch a mess in America?Why is it so hard to fix?

Cross-subsidies are the original sin.The government wants to subsidizehealth care for poor people, chroni-cally sick people, and people whohave money but choose to spend lessof it on health care than officials findsufficient. These are worthy goals,easily achieved in a completely free-market system by raising taxes andthen subsidizing health care or insur-ance, at market prices, for people thegovernment wishes to help.

But lawmakers do not want to beseen taxing and spending, so theyhide transfers in cross-subsidies.They require emergency rooms totreat everyone who comes along, andthen hospitals must overcharge ev-erybody else. Medicare and Medicaiddo not pay the full amount their ser-vices cost. Hospitals then overchargeprivate insurance and the few re-maining cash customers.

Overcharging paying customersand providing free care in an emer-gency room is economically equiva-lent to a tax on emergency-room ser-vices that funds subsidies for others.But the effective tax and expenditureof a forced cross-subsidy do notshow up on the federal budget.

Over the long term, cross-subsi-dies are far more inefficient thanforthright taxing and spending. If thehospital is going to overcharge pri-vate insurance and paying customersto cross-subsidize the poor, the unin-sured, Medicare, Medicaid and, in-creasingly, victims of limited ex-change policies, then the hospitalmust be protected from competition.If competitors can come in and offerservices to the paying customers, thescheme unravels.

No competition means no pres-sure to innovate for better serviceand lower costs. Soon everybodypays more than they would in a

competitive free market. The damagetakes time, though. Cross-subsidiesare a tempting way to hide tax andspend in the short run, but they areharmful over years and decades.

We have seen this pattern overand over. Until telephone deregula-tion in the 1970s, the governmentwanted to provide telephone land-lines below cost. It forced a cross-subsidy from overpriced long dis-tance and a telephone monopoly tokeep entrants out and prices up. Thegovernment wanted to subsidizesmall-town air service. It forced air-lines to cross-subsidize from over-priced big-city services and enforcedan oligopoly to keep entrants fromundercutting the profitable seg-ments. But protection bred ineffi-ciency. After deregulation, every-one’s phone bills and airfares werelower and service was better andmore innovative.

Lack of competition, especiallyfrom new entrants, is the screamingproblem in health-care delivery to-day. In no competitive business willthey not tell you the cost before pro-viding service. In a competitive busi-ness you are bombarded with adsfrom new companies offering a bet-ter deal.

The situation is becoming ridicu-lous. Emergency rooms are staffedwith out-of-network anesthesiolo-gists. Air ambulances take everyonewithout question, and Medicare,Medicaid and exchange policies un-derpay. You wake up with immensebills, which you negotiate afterwardbased on ability to pay. The cash

market is dead. Even if you haveplenty of money, you will be mas-sively overcharged unless you havehealth insurance to negotiate a lowerrate.

Taxing and spending is not goodfor the economy. But it’s better thancross-subsidization. Taxing andspending can allow an unfetteredcompetitive free market. Cross-sub-sidies must stop competition andentry at the cost of efficiency andinnovation. Taxing and spending, onbudget and appropriated, is also

visible and transparent. Voters cansee what’s going on. Finally, broad-based taxes, as damaging as theyare, are better than massive impliedtaxes on very few people.

This is why continued tinkeringwith the U.S. health-care system willnot work. The system will be curedonly by the competition that broughtfar better and cheaper telephone andairline services. But there is a reasonfor the protections that make thesystem so inefficient: Allowing com-petition would immediately under-mine cross-subsidies. Unless legisla-tors swallow hard and put thesubsidies on the budget where theybelong, we can never have a compet-itive, innovative and efficient health-care market.

But take heart—when that marketarrives, it will make the subsidiesmuch cheaper. Yes, the governmentshould help those in need. But thereis no fundamental reason that yourand my health care and insurancemust be so screwed up to achievethat goal.

Mr. Cochrane is a senior fellow ofthe Hoover Institution at StanfordUniversity and an adjunct scholar ofthe Cato Institute

By John H. Cochrane

Honest subsidies beatcross-subsidies. They’dencourage competitionand innovation.

A Toxic Turkish Photo-Op

H ere’s the moral of this shortstory: If you’re a Turkish-Ger-man soccer star, don’t pose for

photographs with the autocrat whogoverns the country of your fore-bears. No good can come of it.

Mesut Özil, 29, had been the mostpopular German of Turkish origin.Now he’s the most infamous, afterposing in May for a grinning photowith President Recep Tayyip Erdo-gan. An integral part of the Germansoccer team since 2010, including the

2014 World Cup championship, Mr.Özil is a player of rare ability, whoselanguid movement on the field cangive an untrained eye the impressionof laziness. Aficionados know better.Still, when Germany crashed out ofthis year’s World Cup in Russia, crit-ics were quick to accuse Mr. Özil ofharming the team by not being dy-namic enough in his play.

In truth, every German player un-derperformed. Mr. Özil was singledout for special opprobrium becauseof the anger in Germany over hishobnobbing with Mr. Erdogan. Thetwo had mugged for the camera at ameeting in London. Mr. Özil plays forArsenal in the English league, and hepublicly presented the Turkish presi-dent with his club team’s jersey. Inthe jarring photo, both player andpresident hold up the jersey for thecamera—Mr. Özil beaming, Mr. Erdo-gan looking smug.

The picture was greeted with dis-may in Germany. Taken before Tur-key’s elections, which Mr. Erdoganhad no intention of losing, it wasseen as an endorsement by Mr. Özil.The German football federation, towhich Mr. Özil was contracted,made clear that it regarded his en-counter with Mr. Erdogan as politi-cally inappropriate.

Lest you think all this was anoverreaction to a 29-year-old jock’spolitical naiveté, bear in mind howtruly toxic Mr. Erdogan is in Ger-many. Last year, after he was barredfrom staging political rallies on Ger-man soil ahead of a referendum in

Turkey, Mr. Erdogan said that theGerman government’s attitude was“not different from the Nazi prac-tices of the past.” There are by someestimates five million people of Turk-ish origin in Germany, and Berlinfears—rightly—that Mr. Erdoganworks overtime to unravel their inte-gration into German society.

Mr. Özil has now announced hisintention never to play for Germanyagain. Lashing out at what he de-scribed as the “racism” of his criticsand the German football federation,he said, “I am German when we win,but I am an immigrant when welose.” This is disingenuous, for Mr.Özil had been—until his photo-opwith Mr. Erdogan—among the best-loved of all German soccer players.He had even won a national awardfor his contribution to integration inGerman society.

Germany doesn’t always take inte-gration seriously and can be far toolax about making Germans of themany recent immigrants who livethere. Mesut Özil seems, however, tohave given the country a jolt. Germanrole models shouldn’t link arms witha foreign politician who pours scornon Germany. When the poster boy forintegration is so disconnected fromGerman values, what hope is therefor the great many refugees who’vearrived in recent months—and whowill, surely, keep on coming?

Mr. Varadarajan is a fellow atStanford University’s Hoover Institu-tion.

By Tunku Varadarajan

© 2018 Dow Jones & Company. All Rights Reserved. THEWALL STREET JOURNAL. Monday, July 30, 2018 | B1

TECHNOLOGY: WALMART WEIGHS STREAMING CHALLENGE TO NETFLIX AND AMAZON B4

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is it manages to pack somany of those features intoa body much closer in size toa smartphone than a chunkydigital single lens reflexcamera, or DSLR. There aresmaller cameras and bettercameras if one feature mat-ters to you above all, butnothing balances both likethe RX100. It captures beau-

tiful photos and video, offerscontrol over every aspect ofthe experience and allowsme to get shots thatwouldn’t come from a phone.And then it slides easily intomy back pocket. At $1,200it’s a pricey way into photog-raphy, certainly. But the bestcamera is one you have withyou, and the RX100 VI might

All kinds of investors haveshifted to these outside funds,including Blackstone Group’sBlackstone Alternative AssetManagement, one of the larg-est investors in global hedgefunds, as well as smaller firms,according to people close tothe matter.

Last month, Igor Tulchin-sky’s WorldQuant raised $2.3billion for its first hedge fundavailable to outside clients,one of the largest fundlaunches in recent years. Forthe past 11 years, the quantita-

PleaseturntopageB2

vestors have been choosing thisoption en masse, making theseoutside funds among the hot-test products on Wall Street.

“It’s a big challenge,” saysTheodore Liu, director of in-vestment research at SilverCreek Capital Management, aSeattle firm that invests inhedge funds for clients and hasput money in funds operatedby some of these firms. “Doyou wait and keep begging” toget into the exclusive, propri-etary funds, or “do you investin their A-minus product thatmay still be very good.”

VIPs inside.As a result, these investors

are left with two options.They can invest in the hun-

dreds of hedge funds that areless appealing than ever as theindustry struggles with an-other year of middling returns.Or they can invest in the“open” funds of these success-ful managers. The results ofthese open funds generallyaren’t as strong as the exclu-sive, employee funds, and theycan carry an array of potentialconflicts, investors say.

Despite the drawbacks, in-

averaged annual gains of morethan 35% since 1990, and wasup about 10% this year throughJuly 20, the people say.

There is a catch, however.These funds are generally

available only to employees,early clients and a few luckyothers, part of an effort tolimit their size and keep themnimble enough to continueracking up gains. For pensionfunds, endowments and otherbig investors, being shut outof these exclusive funds is abit like peering into a hotnightclub that allows only

All the money in the worldcan’t get you into some of theworld’s best hedge funds.

Multibillion-dollar fundsoperated by RenaissanceTechnologies LLC, PDT Part-ners, WorldQuant LLC, TwoSigma Investments LP andother computer-driven “quant”firms have generated market-beating returns for years, ac-cording to people close to thefirms, sparking heated inves-tor interest. Renaissance’s Me-dallion fund, for example, has

PERSONAL TECHNOLOGY | By David Pierce

Sony Camera Outshoots Phones, Fits in PocketIt’s nice to

finally bedone with the“Can you re-ally take goodpictures with

your phone?” debate, isn’tit? Most high-end smart-phones from recent yearstake excellent photos suit-able for everything fromposting on Instagram toprinting on billboards. Ste-ven Soderbergh shot an en-tire movie with an iPhone 7Plus and the result, “Un-sane,” was truly chilling.

That isn’t to say the dedi-cated camera is finished. Thebest cameras, rather thancrowing about megapixelsand chromatic aberration,now offer something yourphone can’t. Finer controlover your images (with lotsof helpful buttons), long bat-tery life, improbably slowslow-mo, enough zoom tospy on Jupiter.

The remarkable thingabout Sony’s new RX100 VI

be the best camera you cantake anywhere.

The RX100 has been anace in the pocket for years.Even the original model—which made its debut in2012 and can be found nowfor less than $400—is still aterrific camera. In this sixthgeneration, the RX100 offersone important upgrade:Zoom. Lots of it.

The RX100 VI’s lens nowextends from 24mm to200mm, which means it cantake shots that are slightlywider than one taken withan iPhone X, but it can alsozoom in about four timescloser.

Sony did make a signifi-cant concession to get thismuch zoom. Previous modelshad a lens with f/1.8 aper-ture, which allowed an enor-mous amount of light in ev-ery time you pressed theshutter. The newest versiononly goes to f/2.8, and f/4.5when you zoom all the way

PleaseturntopageB4

INSIDE

The RX100, center, is closer in size to a smartphone than a DSLR.

EMILYPRAPUOLE

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Hot Hedge Funds Don’t Want Your Money

Coming to a Fertilizer Market Near You—More Potash

FERTILE GROUND: EuroChem, a maker of nitrogen and phosphate fertilizers, is getting into the potash-mining business, a move that could shake up a marketdominated by a handful of producers in North America and the former Soviet Union. A potash mine in Russia. B3

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LastWeek: S&P 2818.82 À 0.61% S&PFIN À 2.04% S&P IT g 1.15% DJTRANS À 2.01% WSJ$ IDX À 0.06% LIBOR3M 2.342 NIKKEI 22712.75 À 0.07% Seemore atWSJMarkets.com

selloffs in recent days: Face-book Inc. wiped out more than$100 billion in market capital-ization Thursday after warningits growth was slowing, whileNetflix Inc. tumbled earlierthis month after missing itsown forecasts for user growthby more than a million sub-scribers. Twitter Inc. and IntelCorp. slid Friday after postingdisappointing earnings.

Yet through much of thoseshock waves, the broader stockmarket has remained resilient.As Facebook suffered its big-gest slide as a public company,dragging other technology

stocks down with it, the S&P500 slipped just 0.3%. Thebroad index lost some groundFriday but eked out a gain forthe week and hovered 1.9%away from its all-time high.

One reason why: While cor-porate-earnings results havebeen uneven for some technol-ogy firms, others have contin-ued posting robust results, withboth Alphabet Inc. and Ama-zon.com Inc. defying analysts’expectations for yet another

PleaseturntopageB2

The broad U.S. stock marketis within 2% of a new high de-spite big drops by some of thetechnology giants that havepowered recent gains, reassur-ing investors that the nine-year rally remains on firmfooting to continue its run.

For months, analysts andinvestors have been debatingwhether a stock market whosegains have largely been drivenby a handful of technologycompanies may be subject to asudden reversal. They have al-ready witnessed several big

BY AKANE OTANI

Market Fights Off Tech Stumbles

Source: Ned Davis Research via S&P Dow Jones Indices

LopsidedSince the 1970s, the five biggest S&P 500 companies have often hada greater combined market capitalization than that of the entirebottom half of the index.Combined share of the S&P 500's market capitalization25

0

5

10

15

20

%

’80 ’90 2000 ’101972

Top five stocks in the S&P 500Bottom half of stocks in the S&P 500

THEWALL STREET JOURNAL.

� Stocks prepare to takeanother run at record......... B10

A startup stock exchange hasdiscovered it isn’t easy to pullU.S. companies away from themighty New York Stock Ex-change and Nasdaq Inc.

IEX Group Inc. made an am-bitious effort to attract compa-nies listed on the NYSE andNasdaq after the 2014 publica-tion of Michael Lewis’s bestseller “Flash Boys.” The bookfollowed IEX’s founders as theybuilt a new exchange designedto protect investors from whatthey called predatory high-speed trading strategies.

But so far, IEX has failed tolist any companies, despite ap-proaching hundreds over thepast several years, includinghousehold names such as Ama-zon.com Inc., Starbucks Corp.and air carrier United Conti-nental Holdings Inc., people fa-miliar with the listings effortsaid.

Some companies that consid-ered an IEX listing have re-treated, such as casino operatorWynn Resorts Ltd. After thedeparture of founder and for-mer Chief Executive SteveWynn, a vocal IEX supporter,the company has indicated it issticking with Nasdaq.

The timetable for IEX’s list-ings launch has slipped repeat-edly, and the executive who ledthe effort took a different job atthe exchange in May.

Now, IEX must either offercompanies greater incentives towin listings or find other waysto grow, said James Angel, a fi-nance professor at Georgetown

PleaseturntopageB9

BY ALEXANDER OSIPOVICH

IEX LagsIn BidTo PoachListings

Crude across the globe isbeing used up faster than it isbeing replaced, raising theprospect of even higher oilprices in the coming years.

The world isn’t running outof oil. Rather, energy compa-nies and petrostates, burnedby 2014’s price collapse, arespending less on new projects,even though oil prices havemore than doubled since 2016.That has sparked concernsamong some industry watch-ers of a price increase thatcould hurt businesses and con-sumers.

The oil industry needs toadd 33 billion barrels of crudeevery year to satisfy antici-pated demand growth, partic-ularly as developing countrieslike China and India are con-suming more oil. This year,new investments are set to ac-count for an increase of just20 billion barrels, according todata from Rystad Energy.

The industry’s average de-cline rate—the pace at whichoutput falls in a particularfield or region without new in-vestment—was 6.3% in 2016and 5.7% last year, the Nor-way-based consultancy said. Inthe four years before thecrash, that decline rate was3.9%.

Any shortfall in supplycould push prices higher, simi-lar to when oil hit nearly $150a barrel in 2008, some indus-try participants say.

“The years of underinvest-ment are setting the scene fora supply crunch,” saidVirendra Chauhan, an oil-in-dustry analyst at consultancyEnergy Aspects. He believes aproduction deficit could comeas soon as the end of nextyear, potentially pushing oilabove $100 a barrel.

Strong demand for crudecould falter if the global econ-

PleaseturntopageB2

BY SARAH KENTAND GEORGI KANTCHEV

Oil SupplyCrimpedAs LegacyOf 2014

B2 | Monday, July 30, 2018 * * * * THEWALL STREET JOURNAL.

BUSINESS & FINANCEINDEX TO BUSINESSESThese indexes cite notable references to most parent companies and businesspeoplein today’s edition. Articles on regional page inserts aren’t cited in these indexes.

AAdvance Auto Parts...B2Advanced Micro........B10A&E Networks Group.B2Alibaba Group...........A10Alphabet ..............B1,B10Amazon.com...B1,B4,B10American Electric .......B4Ant Financial ..............A1Apple...........................B2AT&T.......................B4,B5

BBaihang Credit..........A10BHP Billiton................B8Blackstone Group .......B1BlueCrest Capital........B2Boston Beer................A4BP...........................B2,B8

CCBS..............................A1Comcast.....................B10

EeBay..........................A10Elliott Management...B4EuroChem Group.........B3

FFacebook..............B1,B10

H- IHarley-Davidson.........A4Hearst..........................B2Honeywell...................A4

IEX Group....................B1Intel................A1,B1,B10IntercontinentalExchange...................B9

K - LKKR..............................B9Kohl's...........................B2Lennox International..A4

MMacy's.........................B2Mastercard..........A1,A10Microsoft .............B2,B10MillenniumManagement.............B2

MoneyGram...............A10

NNasdaq ........................B1Netflix.............B1,B4,B10New EnglandConfectionery............B5

NXP Semiconductors..B4

PPDT Partners...............B1Polaris Industries.......A1

Q - RQualcomm...................B4RenaissanceInstitutional..............B2

Renaissance Tech .......B1Royal Bank of CanadaB9Royal Dutch Shell.......B2

SSky.............................B10Sony.............................B1Spirit Airlines.............B9Starbucks....................B1Steelcase.....................A4

TTaiwan Semi.............B10Taobao.com...............A10Tencent Holdings......A10Coca-Cola ....................A13M...............................A4Trump Organization...A4Twitter ........................B121st Century Fox......B10Two Sigma..................B1

UUnder Armour.............B2United Continental.....B1Uralkali........................B3

VViacom.........................B5Vice Media..................B2

W - YWalmart......................B4Walt Disney ...B2,B4,B10Warburg Pincus........A10Wells Fargo.................B9Winnebago IndustriesA1WorldQuant.................B1Wynn Resorts.............B1Yu'e Bao....................A10

INDEX TO PEOPLE

profligate spending before the2014 crash led to years ofpainful restructuring. Even asoil markets recover, Big Oil re-mains under pressure from in-vestors to show it can main-tain financial discipline anddeliver on promises to im-prove returns. While produc-tion is still growing at manycompanies, they have beencautious about commissioningnew projects.

“We will have to go tohigher investment levels thanwe’re seeing at the moment,”Royal Dutch Shell PLC ChiefExecutive Ben van Beurdensaid. “My hope is still that wecan avoid a real supplycrunch.”

Oil-industry investmentsfell 25% in 2015 and 2016, ac-cording to the InternationalEnergy Agency.

Energy companies are spending less on new projects after they were stung by oil’s price collapse.

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est in its own outside funds.Some investors are skepti-

cal about funds run by firmsthat also manage internalfunds, especially if they pur-sue similar strategies.

Amanda Haynes-Dale, co-founder of Pan Reliance Capi-tal Advisors, says she is wor-ried that firms may betempted to place their best in-vestments in the exclusivefunds before allocating to thepublic funds. In one exampleof how that would hurt thepublic fund, a firm buyingFacebook shares throughoutthe day may put the cheapestshares in an internal fund andshares purchased at higherprices in the public fund. Ms.Haynes-Dale says investorsalso need to be vigilant thatpublic funds don’t bear thebrunt of general expensesracked up by the firm.

“My first question is aboutsecurities selection,” she says.“I’d be bothered if I was re-ceiving less favorable pricingand proportionally fewershares of ‘hot issues’ that canturbocharge returns.”

After big European hedgefund BlueCrest Capital Man-agement launched an internalfund for its partners in 2011, itsaw much better returns com-pared with funds BlueCrest of-fered to outsiders, investors say.Advisory firm Albourne Part-ners Ltd. raised questions abouthow the fund was run. Eventu-ally, BlueCrest closed its outsidefunds, and now the firm’sfounder, Michael Platt, runs afund trading his own money.Mr. Platt declined to comment.

Quant firms such as TwoSigma generally have algo-rithms that automatically gen-erate and fill trade orders with-out knowing how the shareswill be allocated, which canavoid the risk of prioritizingthe internal fund, investors say.

The quant firms sometimeshave internal funds that tradein different ways than their out-side funds, which can reassureinvestors worried about con-flicts. Renaissance, for instance,uses less leverage, or borrowedmoney, in its public funds, whilealso holding on to securities forlonger periods than it doeswith the Medallion fund.

Top of the MarketMarket capitalization of the fivelargest S&P 500 companies

THEWALL STREET JOURNAL.

Source: FactSet

Apple

Amazon.com

Alphabet

Microsoft

Facebook

$938.7 billion

886.4

866.6

826.7

504.9

omy slows. On the supply side,some large new projects havebeen commissioned, potentiallysignaling appetite for more in-vestment, and companies aredriving down project costs, al-lowing them to do more forless. Likewise, soaring produc-tion from U.S. shale fields hasoffset underinvestment and de-clines elsewhere. But the shaleindustry’s growth is expectedto peak in the early tomid-2020s, according to indus-try experts.

Once, market participantsworried that supply wouldpeak. Now, they talk of vastoil reserves underground.

The Gulf of Mexico, for in-stance, holds roughly 4 billionbarrels of proven reserves, ac-cording to 2016 data from theU.S. Energy Information Ad-ministration. But new projectsgenerally require billions ofdollars of investment and yearsof development. BP PLC’s $9billion Mad Dog 2 developmentin the Gulf of Mexico isn’t ex-pected to start production un-til 2021, despite getting thegreen light in 2016. Such deep-water projects take an averageof 3½ years and roughly $5 bil-lion to go from approval toproduction, according to con-sultancy Wood Mackenzie.

The industry has a recordof boom-bust spending thatcan lead to big price swings.

Right now, companies arecautious after a period of

ContinuedfrompageB1

Oil SupplyIs GettingPinched

cause I can’t imagine what anAmazon or Google are goingto come up with next,” saidTom Stringfellow, chief invest-ment officer at Frost Invest-ment Advisors, which owns anumber of the so-calledFAANG stocks: Facebook, Ama-zon, Apple, Netflix andGoogle-parent Alphabet.

To be sure, there are plentywho would disagree with Mr.Stringfellow. Brendan Erne, di-rector of portfolio implemen-tation at Personal Capital, hasbeen advising clients to pareback their technology holdingsand raise their exposure to ar-eas of the market that he con-siders neglected.

“The fact that investors con-tinue to double down on thiscrowded trade is a sign ofgreed,” Mr. Erne said, addingthat many seem to have boughtinto the idea that “these com-panies are infallible.”

History has also shown thestock market dropping precipi-tously in periods when theweight of the top five stocksin the S&P 500 significantlydiverged from the weight ofthe bottom half of the index.Before the peak of the dot-com era in March 2000, thetop five S&P 500 stocks madeup 18% of the index, more thandouble the weight of the bot-tom half of the index, accord-ing to Ned Davis Research.

Yet the stock market is farless lopsided today, with the

top five S&P 500 stocks mak-ing up 14% of the market—about the same as the bottomhalf of the index.

Stock indexes that eitherexclude or de-emphasize theFAANG names have also man-aged to perform well, evidencethat areas of the market thathaven’t been dominated bytechnology have still managedto draw in investors. The Rus-sell 2000 index of small-capi-talization stocks has outpacedthe S&P 500’s 2018 advance,while the S&P 500 equal-weighted index, which givesthe smallest companies in theindex the same weight as the

largest ones, has trailed theS&P 500 by less than 2%.

“There is broader strengthoutside of just tech,” said JimPaulsen, chief investmentstrategist at Leuthold Group.

Much of that has to do withthe strength of the economy.Data on Friday showed theU.S. economy grew in the sec-ond quarter at the fastest pacein nearly four years. Corporateearnings have also shined,showing companies rangingfrom industrial conglomeratesto oil producers to depart-ment-store owners increasingprofits with the help of taxcuts and economic growth.

All that has helped liftstocks across the market. Ris-ing consumer spending, cost-cutting and rewards fromshifting more toward e-com-merce have helped stocks suchas Macy’s Inc. soar 57% thisyear, outpacing Amazon’s 55%gain, while Under Armour Inc.has jumped 43%, AdvanceAuto Parts Inc. has added 40%and Kohl’s Corp. has risen34%. Ten of the 11 sectors inthe S&P 500 are posting gainsover the past three months.

“We’re in a period of histori-cally low interest rates, astrong labor market and favor-able tech backdrop,” said Mr.Erne. Despite his misgivingsabout the lofty expectationsaround large tech firms, he saidthose factors are helping himremain cautiously optimistic.

quarter. Earnings across therest of the stock market havebeen strong, buoyed by corpo-rate tax cuts, consumer spend-ing and an economy growingat its fastest pace in years.

The next big test for thetech sector comes Tuesday,when Apple Inc. is projected toreport double-digit growth inquarterly earnings and revenue.

Even after adding hundredsof billions of dollars to theirmarket capitalizations, thefive biggest companies in theS&P 500)—Apple, Amazon, Al-phabet, Microsoft Corp. andFacebook—remain a smallershare of the index than thefive biggest during the lead-upto the 1980s oil glut, the 2000dot-com bust and the 2008 fi-nancial crisis, according toNed Davis Research.

Taken together, many inves-tors are betting the stock mar-ket’s dependence on a smallnumber of technology giantsisn’t as precarious as it seemsand that the bull market hasthe breadth to continue.

“I would never not want toown some of these names be-

ContinuedfrompageB1

MarketFights OffTech Misses

tive investment firm has qui-etly generated strong returnsinvesting billions of dollars fora single client, Israel Eng-lander’s $35.3 billion hedgefund Millennium Manage-ment LLC. WorldQuant willcontinue to invest for Millen-nium, even as it operates thenew fund for outsiders.

Renaissance, founded byformer cryptographer JamesSimons, has raised morethan $15 billion over the past2½ years for its own outsidefunds, helping Renaissance top$57 billion in total assets, in-vestors say, up from $27 bil-lion in 2015. Renaissance be-gan these funds in 2005, wellafter the firm closed its Me-

dallion fund to outsiders in1993 and pushed them out ofthe fund, leaving just thefirm’s employees as investors.

The Renaissance outsidefunds have beaten the market,though they haven’t donenearly as well as Medallion,which manages about $10 bil-lion. The $24 billion Renais-sance Institutional Equities,for example, was up 4.9%through July 20, topping again of 1.2% for the averagehedge fund, according to HFR.Last year, the fund gained15.2%, besting the 8.6% gainfor the average hedge fund.

Two Sigma’s outside hedgefunds have had mixed resultsso far this year, with most flator up about 5%, investors say.Two Sigma manages $54 bil-lion, up from $5 billion in 2010,thanks in part to surging inter-

ContinuedfrompageB1

Hot FundsDon’tWantYourMoney

Despite drawbacks,outside funds areamong Wall Street’shottest products.

AAngel, James..............B1Apple, Rodney.............A6Atkins, Nicholas K......B4

BBeurden, Ben van.......B2Bluedorn, Todd............A4Buccieri,, Paul.............B2

CChauhan, Virendra......B1Cohen, Michael...........A6

DDudley, Bob.................B8

EElias, Alan...................B9Erne, Brendan.............B2

G - HGabel, DeAnne............B9Gilvary, Brian..............B8Glaser, Amy................A1Greenberg, Mark.........B4Happe, Michael...........A1Haynes-Dale, AmandaB2

JJack Ma.......................A1Jasper, Jim..................B9

KKeane, James .............A4Koch, Jim....................A4Krzanich, Brian .........B10

LLevatich, Matt............A4Liu, Theodore..............B1Looney, Bernard..........B8Luigs, Tom...................B3

MManafort, Paul ...........A6McDaniel, Angelica.....A8Metropoulos, C ...........B5Moonves, Leslie..........A1Mueller, Robert...........A6Murphy, Harold B. ......B5

NNovak, Alexander .......B2

PPetraeus, David ..........B9

Platt, Michael .............B2

QQuincey, James...........A4

RRamsay, Matthew....B10Redstone, Shari..........A8Ross, Jo.......................A8

SSheridan, Eric............B10Singer, Paul.................B4

TTeachout, Zephyr........A8Tulchinsky, Igor...........B1

VVincent, Betsy............A6Volkmann, Stephen....A4Votel, Joseph..............A7

W - YWalker, DeAnn............B4Weisselberg, Allen.....A4Williams, Zach............B9Wine, Scott.................A4Yorke, Richard.............B9

Igor Tulchinsky’s WorldQuant raised $2.3 billion for an outside fund.

MICHAELBUCH

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Russia Is Open toExceeding Quotas

Russia’s energy ministersignaled Friday that a coalitionof producers could pump moreoil than agreed upon by year-end, a move which wouldplease the Trump administra-tion but signal the possibledeath of an Organization of thePetroleum Exporting Countriesproduction deal.Last month, Russia, Saudi

Arabia and other producersagreed to increase productionas long as they still respectedproduction levels the nationsagreed to in 2016. But the re-marks from Alexander Novak,Russia’s energy minister, now

suggest Moscow won’t respectits own quota and may beopen to a collective boost evenhigher than it endorsed in June.The decision could bring

back 1 million barrels a day toglobal markets.But speaking Friday to re-

porters on the sidelines of aconference in Johannesburg,South Africa, Mr. Novak “didnot rule out...an increase in oilproduction in excess of 1 mil-lion barrels a day may be dis-cussed,” according to his minis-try’s website. He said thedecision would depend on mar-ket conditions and would bediscussed at a committee gath-ering including Russia, a non-OPEC member, and Saudi Ara-bia, the cartel’s kingpin, onSept. 20 in Algeria.

A&E Networks Group namedthe man behind the hit show“Live PD” to run its business ofcable networks, which includesA&E, Lifetime and History.The company said Paul Buc-

cieri, who was president of A&EStudios and A&E Networks Port-

folio Group, will become presi-dent of A&E Networks Group.He succeeds former Presidentand CEO Nancy Dubuc, who leftto run Vice Media.Mr. Buccieri inherits a cable

business that has battled declin-ing ratings along with much of

the pay-TV industry. The com-pany, a venture of Walt DisneyCo. and Hearst Corp., has seenviewership of its History, Life-time and A&E channels erode ascord-cutters turn away from tra-ditional television.But in the past year, both the

A&E and History channels haveseen double-digit ratings in-creases under Mr. Buccieri’s lead-ership, thanks to hits like “LivePD,” “Vikings” and “Leah Remini:Scientology and the Aftermath,”according to the company.

—Benjamin Mullin

A New Leader Emerges From the Ranks at A&E

HISTO

RYCHANNEL/EVERETT

COLLEC

TION

With hits like ‘Vikings,’ ratings have risen in the double digits under Paul Buccieri, who is taking the top job at A&E Networks.

THEWALL STREET JOURNAL. Monday, July 30, 2018 | B3

land saltwater sea evaporatedhere some 250million years ago,leaving behind one of the largestpotash deposits in the world, aEuroChem official said.

When EuroChem decided toget into the potash-mining

business a decade ago, a com-modities boom had driven theprice for potash toward $1,000per metric ton. But the priceslumped to around one-quarterof that level amid a bust. Itwas hit again in 2013 when

BUSINESS NEWS

Uralkali exited from its part-nership with a Belarusian com-pany that, along with a NorthAmerican trading group, effec-tively controlled prices. Ural-kali ramped up production.

EuroChem, majority-owned

“The market is worriedabout us coming in, the totalvolume we can produce,” saidTom Luigs, global product man-ager for phosphates and potashat EuroChem’s trading arm.

Mr. Luigs and some analystsplayed down the potential im-pact, saying the company wasplanning to increase outputgradually in a way that wouldmeet new demand that he ex-pects from fast-growing mar-kets such as Brazil and South-east Asia. “EuroChem shouldbe able to make incremental in-creases in production withoutdisturbing the markets,” saidJonas Oxgaard, an analyst atSanford C. Bernstein & Co.

The area around Berezniki, atown of some 150,000 about 750miles east of Moscow, is the hubof Russia’s potash industry, theworld’s second largest. An in-

BEREZNIKI, Russia—In thefoothills of Russia’s Uralsmountains, a new potash pro-ducer is looking to lay claim toaround one-tenth of the globalmarket for the fertilizer by themiddle of the next decade.

EuroChem Group AG, amaker of nitrogen and phos-phate fertilizers, is getting intothe potash-mining business, amove that could shake up amarket dominated by a hand-ful of producers in NorthAmerica and the former SovietUnion.

A glut has kept potash pricesweak for a decade, causingother mining companies toclose facilities or put on holddevelopments and leading thetwo largest Canadian produc-ers, Agrium Inc. and PotashCorp. of Saskatchewan Inc., tomerge last year to cut costs.

Closely held EuroChem re-cently launched its first potashmine, and a second one is set tobecome operational next year.The new supply will initiallyfeed EuroChem, which will nolonger need to buy potash fromrivals such as PAO Uralkali. Asproduction ramps up in thecoming years, increasing vol-umes will be sold abroad.

Prices for potash—one ofthree major fertilizers alongsidenitrogen and phosphate—haverecovered somewhat in the pastyear or so. The new productionfrom EuroChem’s two minescould smother the market andsend prices back down, someanalysts said.

Joel Jackson, an analyst atBMO Capital Markets, said de-mand would need to grow byaround 3% a year—above Euro-Chem’s forecasts—to absorb thenew volumes without knockingoff kilter a market where someof the biggest producers care-fully match output to demand inorder to support prices.

BY JAMES MARSON

More Potash Coming to Crowded MarketNew output fromEuroChem’s minesthreatens to smotherrecovering prices

by billionaire tycoon AndreiMelnichenko, plowed aheadwith the project here, calledUsolskiy, and the second insouthern Russia, known as Vol-gaKaliy, which the companysays could propel it into the topthree fertilizer companies in theworld by nutrient capacity.

The efforts are ambitious fora company that not only hadnever built a potash mine—acomplex and expensive under-taking—but took on two giantprojects at the same time. Euro-Chem and analysts said the com-pany had one big advantage: lowcosts, thanks in part to the de-posits being closer to the sur-face, as well as the weak ruble.“Looking at our peers, our costsare one of the lowest if not thelowest,” said EuroChem’s Mr.Luigs. “But we are not going torock the price down.”

The efforts are ambitious for EuroChem. The company not only had never built a potash mine—a complex undertaking—but took on two giant projects at the same time.

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Ambitious GoalsFor Mine in Foothillsof Russia’s Urals

At the Usolskiy mine, orefrom which the fertilizer is pro-duced lies around about 1,600feet below the surface. Giantmining machines have beenlowered down the lift shaft inpieces and reassembled. Themachines’ metal teeth gougeinto the rock—a mix of red po-

tassium salts, white sodiumchloride, better known as tablesalt, and gray clay. As the ma-chines drill, they create a mazeof tunnels. The mined ore issent by conveyor belt to a pro-cessing plant where it is puri-fied. There have been setbacks,including a fire at the processingplant at Usolskiy in Decemberthat set the project back twomonths and problems sinking ashaft at VolgaKaliy that delayedit by nearly three years.

The Usolskiy mine aims to

produce 450,000 metric tonsby the end of the year, com-pared with global output of 65million tons last year. By themiddle of the next decade, thecompany wants to produce atotal of 8.3 million tons fromboth mines. Some analysts saidthat target could be overambi-tious. “It’s not a slight towardsEuroChem to be very skepticalof their ability to bring this ca-pacity on the market on time,”said Sanford C. Bernstein &Co.’s Jonas Oxgaard.

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B4 | Monday, July 30, 2018 THEWALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

The retailer is considering whether to offer its customers a subscription video-streaming service, in addition to television sets.

GUNNARRATH

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BEIJING—Chinese antitrustregulators weighed in onQualcomm Inc.’s busted acqui-sition of Dutch chip makerNXP Semiconductors withtheir own statement: Don’tblame us.

China’s State Administra-tion for Market Regulation—the last of nine regulatorsaround the world needed togreen-light the deal—said Fri-day that Qualcomm’s latestproposal failed to addresscompetition concerns. Theregulator said it had extendedits own deal-review deadlineto Oct. 14.

“Qualcomm and NXP de-cided to abandon the deal asthe deadline the two partiesagreed on expired. [We] regretthis,” the regulator said, add-ing that it had hoped to con-tinue communicating withQualcomm and resolve the re-maining issues within the re-view period.

Qualcomm and NXP didn’trespond to requests for com-ment.

Qualcomm ditched its $44billion bid Wednesday, the lat-est deadline it had set forcompleting the acquisition. Itcited the stalled process inChina, having extended thedeadline in April while await-ing Chinese approval. The ac-

quisition had been announcedin October 2016.

The San Diego-based chipmaker will pay a $2 billiontermination fee to NXP.

Chinese officials have pub-licly insisted the delay hadnothing to do with escalatingtrade friction with the U.S.,but people with knowledge ofthe situation have told theJournal that the friction is themain reason for it.

China can’t keep pace withthe U.S. on retaliatory tariffs—it imports far less from theU.S. than the U.S. importsfrom China—but it has otherweapons including holding upU.S. M&A deals and businesslicense approvals, these peoplesay.

For Beijing, which is seek-ing to develop its own semi-conductor industry, blockingthe NXP acquisition pays anadded dividend: It hinders thegrowth of Qualcomm, whichhas a commanding position incutting-edge chip technology,longtime China economistChristopher Balding haspointed out.

With NXP, Qualcomm wouldhave gained a company thatreported $9.26 billion in reve-nue last year and employssome 30,000 people.

—Liyan Qi

China Says It Isn’t toBlame for Failure ofNXP-Qualcomm Deal

Dutch FirmWasPopular TradeFor Hedge Funds

Qualcomm Inc. wasn’t theonly one betting on a purchaseof Dutch chip maker NXPSemiconductors. The potentialdeal attracted some of thehedge-fund industry’s biggestnames.

One prominent holder ofNXP stock was Elliott Man-agement Corp., run by billion-aire activist investor PaulSinger. It held 17.2 millionshares as of June 5, according

to a filing. An array of otherprominent funds also held po-sitions as of March 31.

It isn’t known if thesefunds changed their positionsbefore the deal collapsedWednesday. If the funds didn’tchange their positions beforethe deal fell apart, they couldbe sitting on losses. NXP’sshares ended Friday down5.65% since Tuesday’s close.

Qualcomm abandoned its$44 billion purchase of NXPSemiconductors after the Chi-nese government refused toapprove it, a casualty of theChinese-U.S. trade feud.

—Rachael Levy

Walmart Inc. is exploring asubscription video-streamingservice that would seek tochallenge Netflix Inc. and Am-azon.com Inc. by offering pro-gramming that targets MiddleAmerica, according to peoplefamiliar with the plans.

Planning is still in the early

stages and Walmart hasn’tgiven the project a green light,the people said. A decision re-garding whether to move for-ward could come by late sum-mer or early fall, according toone of these people.

The retail giant would belate to the subscription video-streaming business, an in-

By Joe Flint,Erich Schwartzel

and Sarah Nassauer

creasingly crowded marketthat also includes Hulu andAT&T Inc.’s HBO.

Walmart is working withveteran television executiveMark Greenberg on the poten-tial service, which could in-clude a lower-price monthlysubscription than those of-fered by Amazon and Netflix,according to people familiarwith the plans.

Walmart is considering pro-grams that target consumerswho live outside of large cit-ies, according to two of thesepeople.

Mr. Greenberg, who lastyear left as chief executive ofEpix, a pay-television channel,has been advising Walmart forseveral months as it considerslaunching its own direct-to-consumer streaming service,the people said. Mr. Greenbergalso held senior positions atpay channels Showtime andHBO.

If it proceeds, the subscrip-tion-based media venturewould be separate from Vudu,

the online movie-streamingservice Walmart bought in2010, the people said.

Vudu, which allows users tobuy or rent individual films, iswidely available on televisionsets and streaming devicessuch as Roku but hasn’t at-tracted the usership recordedby competitors.

Among U.S. households thatstreamed video on a televisionat home in April, 73% viewedNetflix, 50% watched YouTube,36% Hulu, 28% Amazon PrimeVideo and 13% Vudu, accordingto comScore Inc.

News of Walmart’s poten-tial programming strategy wasearlier reported by the Infor-mation, a technology-newswebsite.

Walmart could license ex-isting content rather than pro-duce original programming,though establishing its ownbrand of original contentcould be important to the suc-cess of a Walmart streamingservice, as it has been for Net-flix and others, because ac-

quired shows can be readilyavailable elsewhere.

Producing original contentwould be costly.

The aggressiveness of Net-flix has driven up prices fortalent for everyone.

This year, Netflix has indi-cated it is spending $8 billionon original and acquired con-tent. Amazon’s programmingbudget is more than $4 billion,while HBO will spend $2.7 bil-lion this year.

Programming could be“middle of the road” andaimed at Walmart’s core shop-pers away from the east andwest coasts, according to twopeople close to the project.The ratings success of thebrief return of “Roseanne” onWalt Disney Co.’s ABC televi-sion network last spring indi-cated there is a large audiencenot being served by most pro-grammers.

“They’re catering to thatAmericana base,” one of thepeople familiar with the mat-ter said.

Walmart Studies Video StreamingSubscription businesswould pose challengeto services offered byNetflix and Amazon

in. That makes it a littleharder to get those cool soft-background shots. It can alsomake low-light photographytricky: Because the cameracan’t let in as much light atonce, the shutter has to stayopen longer, which can cre-ate shakier, blurrier images.

Sony says its improvedimage stabilization helpscompensate for the potentialshake, and even in bad lightmy shots mostly still comeout clear, but I notice thedifference.

The RX100 offers a re-markable amount of controlover your photos. It hasscene presets, full manualmode, even panorama andhigh-frame-rate capturetools. Actually finding andtweaking all the settings canbe a chore, though. Because

ContinuedfrompageB1

From Sony,A CameraIn Balance

the camera is so small, itcan’t have buttons and dialsfor everything, so you’restuck tapping tiny icons onthe touch screen or scrollingthrough the confusing set-tings menus. All the indica-tors take up too much of thescreen, too, obscuring theedges of every shot.

Let’s be clear: This cameratakes terrific pictures. Evenwhen my iPhone X takes agreat shot, as it often does,the RX100’s was always moredetailed and more accurate.Often in my testing, I wouldtake the same photo with myphone and my camera, trans-fer both to my computer,then try to guess whichcame from which device. Thebetter one was always fromthe RX100.

In my testing, the RX100’szoom and low-light perfor-mance separated it mostfrom my phone. The RX100’slarge 1-inch sensor helped itcapture sharp shots long af-ter sunset while I watched asoccer game, and the zoommade my 18th-row seats lookas if I was sitting on thebench. Those are shots a

phone just can’t get, and theRX100 handles them all.

That said, I was struckduring my testing by justhow good smartphone cam-eras have become. TheiPhone X’s portrait mode,slow-motion video and low-light photography all hold upadmirably next to higher-performance cameras. TheRX100 is still a full stepabove, but phones continueto get better fast.

There were even timeswhere I had the RX100 withme and still reached for myphone to grab a quick shot.So often, photos aren’t art—you’re snapping a flier to re-member a coming festival, areceipt to track expenses ora weird sign to text to yourweird-sign-loving friend. I’mmostly concerned with get-ting decent photos as quicklyas possible, then moving on.

Sony’s PlayMemories appis meant to help you transferphotos from the RX100 toyour phone, but it’s as if thedevelopers built it as a tor-ture device: You have to con-nect to a specific Wi-Fi net-work, scan a QR code, install

a profile, wait approximatelyforever, and sometimes doall of that three or fourtimes before it works. Mostmanufacturers have similarapps—and most are just asbad. Apple’s $30 SD card-to-Lightning adapter helps abit, but I’m convinced thebiggest problem facing dedi-cated cameras is that theydon’t seem to want to fitinto your digital life. I wantgreat photos, but I also wantInstagram.

Going forward, cameramanufacturers and phonemakers should look for bet-ter ways to work together.We’re a long way away fromrendering dedicated camerasobsolete, especially whenthey can produce 360-degreeshots, long-zoom photos orcrazy high-frame-rate video.But from what I’ve seen fromthis latest RX100, there’s re-ally no need to buy anythingthat doesn’t fit in yourpocket.

To get more WSJ Technologyanalysis, reviews, advice andheadlines, sign up for ourweekly newsletter.

payers,” DeAnn Walker, chair-woman of the commission,said Thursday before votingagainst the project, adding,“The benefits are based on alot of assumptions that arequestionable.”

AEP said it was pulling theplug on the project in part be-

cause without speedy regula-tory approvals, it wouldn’t beable to fully take advantage offederal tax credits that madeit more economically attrac-tive.

The company had hoped tocomplete the project by theend of 2020.

“We are disappointed thatwe will not be able to move

forward,” said Nicholas K. At-kins, AEP’s chief executive.

AEP previously estimatedthat Wind Catcher would leadto $7 billion in savings, net ofcost, for customers of its sub-sidiaries, Public Service Co. ofOklahoma and SouthwesternElectric Power Co., over 25years.

It also said the projectwould support approximately4,000 direct jobs during con-struction and 80 permanentjobs once operational.

Critics said Wind Catcher’stouted benefits to consumerswere based on natural-gasprices rising substantially infuture decades and arguedthat the project would have in-creased costs for consumers inthe next decade.

Texas regulators’ denial ofWind Catcher came a year tothe day after AEP announcedit would purchase the projectfrom Invenergy, a privatelyheld firm based in Chicagothat had been developing thewind farm.

American Electric PowerCo. said Friday that it is scrap-ping plans to develop one ofthe largest wind farms in theU.S., a day after the projectwas rejected by Texas regula-tors.

Called Wind Catcher, the 2-gigawatt project was slated tobe built in the Oklahoma Pan-handle at an expected pricetag of $4.5 billion.

It would have served cus-tomers in Arkansas, Louisiana,Oklahoma and Texas via a re-lated 350-mile transmissionline.

The wind-power project hadreceived needed approvalsfrom regulators in Arkansas,Louisiana and the federal gov-ernment, according to thecompany.

But on Thursday, the PublicUtility Commission of Texasvoted unanimously to deny itas currently proposed.

“I don’t believe that thebenefits are there for the rate-

BY ERIN AILWORTH

Wind-Power Plan Scrapped

The $4.5 billion 2-gigawatt projectwasn’t approved byTexas regulators.

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BUSINESS NEWS

Paramount said.Along with the overwhelm-

ingly positive reviews, openingnight audiences gave the newmovie an average grade of A,according to market researchfirm CinemaScore. That is thehighest-ever such grade for a“Mission: Impossible” movie,Paramount said, and a signthat it should play well in theweeks to come, thanks to posi-tive word of mouth.

The strong start for a newentry in one of Paramount’sfew successful franchises pro-

vides a much-needed boostfor the studio, which hasbeen struggling at the box of-fice for the past few years. Italso had a hit with April’ssurprise horror sensation, “AQuiet Place.”

Mr. Cruise’s box-office per-formance has been inconsis-tent in recent years and he iscoming off a flop in last sum-mer’s “The Mummy.” He hasalways been intimately con-nected to the “Mission” fran-chise, however, as his willing-ness to engage in never-

before-seen stunts in eachsequel provides much of theirappeal.

In “Fallout,” Mr. Cruisejumps from a plane at high al-titude in a scene shot withoutcuts and dangles on a ropefrom a helicopter. He alsobroke his ankle while shootingthe nearly $200 million pro-duction.

Sixty percent of the open-ing-night audience was over35, Paramount said, a sign Mr.Cruise’s appeal continues to bewith moviegoers who haveknown him for many years.

“Mission: Impossible—Fall-out” is the last big-budgetfranchise movie of the sum-mer. In the past, some ofthese movies have come outin August, but Hollywood stu-dios are increasingly willingto release them throughoutthe year to avoid cannibaliz-ing each other during thesummer.

This weekend’s other newrelease, the TV cartoon adap-tation “Teen Titans Go! To theMovies,” from AT&T Inc.’sWarner Bros., opened to amodest $10.5 million.

Powered by the best re-views of any big-budget moviethis summer, Tom Cruise’s“Mission: Impossible—Fallout”opened to a new high for thefranchise over the weekend.

The sixth entry in the 22-year-old film series, based ona 52-year-old television show,opened to an estimated $61.5million in the U.S. and Canada,according to Viacom Inc.’sParamount Pictures, which re-leased it.

Though far from the $100million-plus openings of somesuperhero films, the latest“Mission” topped the last en-try in the series, “Mission: Im-possible—Rogue Nation,”which made its debut to $55.5million in 2015. Prior moviestypically opened between$45.4 million and $57.8 mil-lion, putting “Fallout” roughlyin line with them when ac-counting for rising ticketprices.

Overseas, “Mission: Impos-sible—Fallout” grossed $92million in 36 foreign markets,also a high for the franchise,

BY BEN FRITZ

Cruise’s ‘Fallout’ Jumps to No. 1‘Mission: Impossible—Fallout,’ starring Tom Cruise, opened to a new box-office high for the franchise amid positive reviews.

CHIABELLAJA

MES/PARAMOUNT/ASSOCIATE

DPRESS

EstimatedBox-Office Figures, ThroughSundaySALES, INMILLIONS

FILM DISTRIBUTOR WEEKEND* CUMULATIVE %CHANGE

1. Mission: Impossible—Fallout

Paramount $61.5 $61.5 --

2. MammaMia! HereWeGoAgain

Universal $15 $70.4 -57

3. TheEqualizer 2 Sony $14 $64.2 -61

4. Hotel Transylvania 3 Sony $12.3 $119.2 -48

5. TeenTitansGo!To theMovies

WarnerBros.$10.5 $10.5 --

*Friday, Saturday andSunday Source: comScore

Round Hill, accusing the firmof “bad faith” tactics intendedto drive down the price.

According to the trustee,Round Hill knew all about aFood and Drug Administrationreport in May that cited “ap-parent roof leaks, ventilationduct(s) in need of repair, andunclean equipment and uten-sils.” The federal food safetyagency acknowledged thatNecco’s parent, New EnglandConfectionery, had tackled thealleged sanitation problems. Itwould take another audit be-fore the FDA would issue aclean bill of health, the agencysaid.

All this was known to thebidders at an auction, accord-ing to the trustee. However, inJune, with money still owed,Round Hill emailed the trusteeabout “widespread, and na-tional, negative press cover-age,” which Necco’s buyercalled “stunning and unprece-dented.” Publicity about theFDA concerns “totally dis-rupted our financing commit-ments and plans for rebuildinga Necco platform,” the Juneemail said. In his lawsuit seek-ing damages from Round Hill,the trustee says Necco’s buyersare engaging in “unfair and de-ceptive acts.”

—Lillian Rizzocontributed to this article.

The maker of Necco Wafersand other vintage candies isshutting down abruptly, weeksafter the billionaire whobought it out of bankruptcy, C.Dean Metropoulos, complainedhe wasn’t clued in about sani-tation issues and refused topay the final $1 million.

Employees of the Massachu-setts plant were told last weekNew England ConfectioneryCo. is closing and that therewas a new owner, but the iden-tity of the buyer remains un-known. It is unclear whetherthe new mystery owner willcontinue to produce the candy.

City officials in Revere,Mass., where the Necco plantwas located, have yet to hearfrom Round Hill Investments,the Metropoulos family’s in-vestment firm that bought thecompany at a bankruptcy auc-tion, said Bob Marra, chief ofstaff to Mayor Brian M. Arrigo.

Round Hill is the firm thatrescued the Twinkie brandfrom bankruptcy and keptother well-known food brandsfrom falling into extinction.

A Round Hill representativedeclined to identify the buyer.

Necco’s shutdown came lessthan a month after bankruptcytrustee Harold B. Murphy sued

BY PEG BRICKLEYAND PATRICK FITZGERALD

Candy Maker NeccoSold by Its New OwnerAfter Deal Goes Sour

The name of Necco’s buyer isn’t known, but its factory is closing.

FRANCE

SM.ROBERTS

/NEWSCO

M/ZUMAPRESS

THEWALL STREET JOURNAL. * * Monday, July 30, 2018 | B9

Heavy-equipment maker Caterpillar is scheduled to report its quarterly results on Monday.

ANDRECO

ELH

O/B

LOOMBERGNEWS

THE TICKER | Market events coming this week

US$vs,Fri YTD chg

Country/currency inUS$ perUS$ (%)

AmericasArgentina peso .0366 27.3217 46.9Brazil real .2694 3.7118 12.1Canada dollar .7660 1.3056 3.8Chile peso .001554 643.40 4.5EcuadorUSdollar 1 1 unchMexico peso .0537 18.6315 –5.3Uruguay peso .03253 30.7400 6.7Venezuela b. fuerte .000008119850.0001 1158783.6Asia-PacificAustralian dollar .7400 1.3514 5.5China yuan .1468 6.8137 4.8HongKong dollar .1274 7.8473 0.4India rupee .01457 68.625 7.4Indonesia rupiah .0000694 14418 6.9Japan yen .009006 111.04 –1.5Kazakhstan tenge .002883 346.82 4.3Macau pataca .1237 8.0850 0.5Malaysia ringgit .2462 4.0613 ...NewZealand dollar .6790 1.4728 4.5Pakistan rupee .00775 129.000 16.6Philippines peso .0188 53.227 6.5Singapore dollar .7363 1.3582 1.6SouthKoreawon .0008961 1115.90 4.6Sri Lanka rupee .0062653 159.61 4.0Taiwan dollar .03271 30.570 3.0Thailand baht .02995 33.390 2.5Vietnam dong .00004304 23233 2.3

US$vs,Fri YTD chg

Country/currency inUS$ perUS$ (%)

EuropeCzechRep. koruna .04548 21.988 3.3Denmark krone .1565 6.3903 3.0Euro area euro 1.1656 .8580 3.0Hungary forint .003615 276.66 6.8Iceland krona .009493 105.34 1.7Norway krone .1221 8.1908 –0.2Poland zloty .2721 3.6758 5.7Russia ruble .01594 62.719 8.7Sweden krona .1131 8.8381 8.0Switzerland franc 1.0055 .9945 2.1Turkey lira .2061 4.8529 27.9Ukraine hryvnia .0373 26.7770 –4.9UK pound 1.3104 .7631 3.1Middle East/AfricaBahrain dinar 2.6459 .3779 0.2Egypt pound .0561 17.8325 0.3Israel shekel .2738 3.6518 5.0Kuwait dinar 3.3028 .3028 0.4Oman sul rial 2.5974 .3850 0.01Qatar rial .2746 3.642 –0.2SaudiArabia riyal .2666 3.7511 0.02SouthAfrica rand .0759 13.1793 6.6

Close Net Chg %Chg YTD%Chg

WSJDollar Index 88.29 –0.10–0.11 2.69Sources: Tullett Prebon,WSJMarketDataGroup

MondayEarnings expected*

Estimate/YearAgo($)

AvalonBay 1.06/1.20Caterpillar 2.74/1.49Illumina 1.11/0.82SBAComm. 0.16/0.08Seagate Tech. 1.45/0.65SimonProp. 1.64/1.23

TuesdayFed two-daymeetingstarts

ChicagoPMIJune, previous 64.1July, expected 62.3

Consumer confidenceJune, previous 126.4July, expected 125.5

Employment cost index1st qtr., previous up 0.8%2nd qtr., expected up 0.7%

Personal incomeMay, previous up 0.4%June, expected up 0.3%

Personal spendingMay, previous up 0.2%June, expected up 0.4%

Earnings expected*Estimate/YearAgo($)

AmericanTower0.81/0.80

Apple 2.16/1.67Charter Comm. 0.94/0.52Ecolab 1.27/1.13Pfizer 0.74/0.67P&G 0.90/0.85

WednesdayFed policymeeting endsTarget rate 1.75-2.00

Mort. bankers indexesPurch., previous down1%Refinan., prev. up 1%

EIA status reportPrevious change in stocks inmillions of barrels

Crude oil down6.1Gasoline down2.3Distillates down0.1

Total vehicle salesDomestically produced, at anannual rate

June, previous 17.47mil.July, expected 17.12mil.

Construction spendingMay, previous up 0.4%June, expected up 0.3%

ISMmfg. indexJune, previous 60.2July, expected 59.3

Earnings expected*Estimate/YearAgo($)

ADP 0.90/0.66DominionEnergy

0.79/0.67ExpressScripts

2.21/1.73Humana 3.77/3.49MetLife 1.17/1.19Tesla (2.78)/(1.33)

ThursdayInitial jobless claimsPrevious 217,000Expected 220,000

EIA report: natural gasPrevious change in stocks inbillions of cubic feet

up24

Factory ordersMay, previous up 0.4%June, expected up 0.7%

Earnings expected*Estimate/YearAgo($)

Activision 0.35/0.43Aetna 3.04/3.42Becton, Dickinson

2.86/2.46DowDuPont 1.30/1.08DukeEnergy 1.01/1.01EOG 1.25/0.08

FridayISMnon-mfg indexJune, previous 59.1July, expected 58.5

NonfarmpayrollsJune, previous 213,000July, expected 188,000

Int’l trade deficit inbillionsMay, previous $43.05 bil.June, expected $46.6 bil.

Unemployment rateJune, previous 4.0%July, expected 3.9%

Earnings expected*Estimate/YearAgo($)

Ameren 0.78/0.79CboeGlobal 1.03/0.87CenterPoint 0.32/0.29KraftHeinz 0.92/0.98LyondellBasell 2.92/2.82Noble Energy 0.22/0.05

* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES) � ADJUSTED FORSTOCK SPLIT NOTE: FORECASTS ARE FROM DOW JONES WEEKLY SURVEY OF ECONOMISTS

MARKETS

“No one wants to take anadvance position on contractbecause they’re afraid thatthere will be another tariffdown the line that they didn’taccount for,” said Zach Wil-liams, Stewart & Jasper’s se-nior marketing director.

After years of drought thathurt crop yields, California’salmond industry recentlybounced back, with the stateprojecting the current year’scrop to be the biggest on re-cord. Chinese demand for thepopular tree nut was also upsharply in the first half of thisyear.

But after the introductionof tariffs, demand softened,with June 2018 exports belowthose in the prior year. Slack-ening demand is already start-ing to weigh on prices. Apound of American almondsrecently sold for about $2.46,versus as much as $2.76 apound two months earlier, ac-cording to data firm MintecLtd.

U.S. almond exports toChina in June were about halfof what they were in the samemonth a year ago, and farmershave presold just 156 millionpounds of almonds for thenext season starting Aug. 1, ac-cording to data from the Al-mond Board of California.Around this time last year,they had committed shipments

University. “Starting a listingsbusiness is really hard, becausemost companies don’t want tobother changing their listing ex-change,” he said.

IEX declined to make anyoneavailable for an interview. “Wedo not comment on hearsay andspeculation,” IEX President Ro-nan Ryan said in an emailedstatement. Six-year-old, NewYork-based IEX handles about2.4% of daily U.S. stock-tradingvolume. Companies that list onIEX could get media buzz forsigning on with an exchangethat styles itself as a fighter forfairness in the stock market.

Amazon and United declinedto comment. A Starbucksspokesman said he was unableto confirm whether the coffeegiant was approached by IEX. AWynn Resorts spokesman said,“We are satisfied with our cur-rent listing provider.”

The NYSE, founded in 1792,and Nasdaq, which dates to1971, have an effective duopolyin U.S. corporate listings. Athird exchange operator, CboeGlobal Markets Inc., has a list-ings business focused on ex-change-traded funds ratherthan corporations.

NYSE parent Intercontinen-tal Exchange Inc. and Nasdaqearned a combined $684million

ContinuedfrompageB1

IEX LagsIn Bid forListings

U.S. almond farmers aregetting crunched from all sidesas they head into what is likelyto be a record harvest season.

Prices for California al-monds have fallen more than10% over the past two months,reflecting expectations for abumper crop and steep tariffsimposed this year by China,which until recently was thesecond-largest importer of U.S.almonds after the EuropeanUnion.

In response to China’s tar-iffs, which now add a 50% taxto almond prices, some Chi-nese businesses say they aretrying to buy more nuts growndomestically and from otherproducers such as those inAustralia and Africa.

In yet another setback forU.S. farmers, China has quietlyclosed a trading loophole thatfor years allowed large vol-umes of American almonds tobe transported into the coun-try via Vietnam without incur-ring import taxes. Beijing isalso cracking down on com-modities that have been ille-gally smuggled into the coun-try or brought in viatransshipments, where theyare routed to other countriesand then shipped to China.

The moves reflect China’sefforts to make its tariffs onU.S. agricultural products aseffective as possible. Almondsare likely to be among thehardest hit because the U.S. isthe world’s largest producerand exporter of almonds, with80% of global supply from Cal-ifornia.

“China is very, very impor-tant,” said Jim Jasper, ownerand president of family-ownedStewart & Jasper Orchards inNewman, Calif., adding thatdemand from the country has“increased tremendously” inrecent years. Now with thehigher tariffs and gray ship-ping channels closed, manygrowers and exporters areworried about the comingmonths, when the U.S. harvestseason begins and shipmentvolumes peak.

BY LUCY CRAYMER

No Almond Joy for U.S. FarmersAfter years of drought that hurt crop yields, California is projecting the current year’s almond crop to be the biggest on record.

ELIJA

HNOUVELA

GE/R

EUTE

RS

U.S. almond exportsto Vietnam

U.S. almond exports to Chinaand Hong Kong

U.S. almond export prices

DownturnCalifornia almond growers are feeling the impact of Chinese tariffs ahead of a record crop season.

Sources: Almond Board of California (exports to China, Hong Kong, Vietnam); Mintec (export prices) THEWALL STREET JOURNAL.

50

0

10

20

30

40

million pounds

’182017

10

0

2

4

6

8

million pounds

’182017

$6,200

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6,000

a metric ton

A M J J

from listings last year, accord-ing to the two exchange groups.IEX tried to lure their compa-nies by offering five years offree listings. Adding listingscould enhance IEX’s prestigeand boost its market share.

IEX may still break into theclub. The exchange says it em-ploys six people dedicated tolistings, and some companieswere receptive to its pitch.

“We were intrigued by theIEX proposition,” said DeAnneGabel, senior director of inves-tor relations at Spirit AirlinesInc. The discount carrier con-sidered moving from Nasdaq toIEX but switched to the NYSE inDecember. Spirit could move toIEX eventually, Ms. Gabeladded.

IEX Chief Executive OfficerBrad Katsuyama played ahands-on role in wooing compa-nies, people with knowledge ofIEX’s outreach efforts said. Forinstance, David Petraeus, re-tired general and former Cen-tral Intelligence Agency directorand now a KKR & Co. executive,asked to meet him after reading“Flash Boys,” a person familiarwith the situation said. Mr. Kat-suyama suggested bringing theprivate-equity giant to IEX, peo-ple briefed on the discussionssaid. But the company stuck tothe NYSE. Mr. Petraeus declinedto comment through a KKRspokeswoman.

Another global figure drawninto IEX’s efforts: former Cana-dian Prime Minister StephenHarper. IEX hired his consultingfirm to lobby companies dual-listed in Toronto and New York,such as Royal Bank of Canada,about listing on IEX, people fa-miliar with the situation said.Mr. Harper’s spokeswomandidn’t respond to requests forcomment. RBC declined to com-ment on its plans.

“As the ‘Flash Boys’ aurafaded, listed companies in-creased their focus on the de-tails of IEX as a listing venueand they came away unim-pressed,” said former NYSEGroup President Thomas Farley.The NYSE and Nasdaq foughtback, with top executives likeMr. Farley and Nasdaq CEO Ad-ena Friedman speaking to lead-ers of companies that had beencourted by IEX, according topeople briefed on the discus-sions.

— Vipal Mongaand Laura Stevens

contributed to this article.

’15 ’16 ’172014

Looking InIEX has sought to win listedfirms over from rivals but hasyet to break through.Listing revenue, annual

THEWALL STREET JOURNAL.

Sources: Intercontinental Exchange; Nasdaq

Note: Numbers include revenues fromlistings of exchange-traded products as wellas companies.

$400

0

100

200

300

millionICE (NYSE) Nasdaq

Mr. Yorke’s departurecomes as Wells Fargo plans tofurther integrate its corpo-rate and investment banks toreduce costs and better serveits clients, The Wall StreetJournal reported in April.

The bank’s plans have ledto layoffs and affected someindustry coverage groups, ad-visory teams, equity and debtcapital markets originationand certain corporate-bank-ing relationship managers,people familiar with the mat-ter said.

Mr. Yorke also oversaw thebank’s international group,which until mid-2017 in-cluded oversight of its for-eign-exchange business thathas been under regulatory in-vestigation.

A top executive of WellsFargo & Co.’s wholesale unitis leaving the bank, accordingto an internal bank memo re-viewed by The Wall StreetJournal.

Richard Yorke, who spentthe last year as chief operat-ing officer of the wholesalebusiness, is leaving the bankin early August, spokesmanAlan Elias confirmed.

“During his time with thecompany, he has led a varietyof significant work, includingmost recently helping whole-sale banking work with ourregulators,” Mr. Elias said.

Wells Fargo’s wholesaleunit contributes about half ofthe overall profit of the bank.

BY EMILY GLAZER

Wells Executive ExitsWholesale Business

CurrenciesU.S.-dollar foreign-exchange rates in lateNewYork trading

of nearly double that.California’s almond board

estimates that most of the 43million pounds of almondsthat the U.S. shipped to Viet-nam in the year through July2017 ended up being con-

sumed in China. The U.S.shipped 141 million pounds toChina and Hong Kong in thesame period.

—Stella Yifan Xieand Wei Zhou

contributed to this article.