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‘Trump the Opera’ THE MIDDLE SEAT | D1 DANIEL HENNINGER
OPINION | A13 ISTOCK HOLIDAY TRAVEL’S
BIG SURPRISE: DEALS
* * * * * * * DJIA 17959.64 g 77.46 0.4% NASDAQ 5105.57 g 0.9% STOXX 600 331.55 g 1.1% 10-YR. TREAS. À 7/32 , yield 1.799% OIL $45.34 g $1.33 GOLD $1,306.80 À $20.40 Cubs End 108 Years of Heartbreak in Thrilling World Series Win What’s
News
Business & Finance
anks accounted for less
than half the mortgage
dollars extended to borrowers last quarter, reflecting
the growing role of less riskaverse nonbank lenders. A1 B The U.S. filed an antitrust
suit against AT&T’s DirecTV,
alleging collusion in connection with a bitter dispute over SportsNet LA. B1
Oil futures tumbled 2.9%
to $45.34 a barrel on a report
of the biggest weekly U.S.
crude surplus on record. C1
Stocks extended a losing
streak on election concerns
and oil’s slump. The Dow fell
77.46 points to 17959.64. C4
Five stocks have been
responsible for 81% of the
Dow’s gains this year. C1
Whole Foods scrapped
its dual-CEO leadership and
posted its first annual drop
in comparable sales. B1
Valeant is exploring a
sale of its eye-surgery
equipment business. B1 World-Wide
Secret recordings fueled a
battle between FBI agents and
corruption prosecutors over
whether to pursue a probe
of the Clinton Foundation. A1
Trump could face conflicts
of interest over his children’s
business with politically connected foreign firms. A1
Google’s Schmidt helped
with early development of
Clinton’s campaign, according to leaked emails. A4
Mississippi police were
interviewing a “person of interest” over a fire at a black
church on which someone
painted “Vote Trump.” A3
An Iowa man was held in
connection with the ambushstyle killings of two police officers near Des Moines. A3
Syrian rebels rejected a
call by Russia for militants
and civilians to escape
Aleppo during a “humanitarian pause” on Friday. A9
Americans are leaving
the costliest cities for
cheaper areas faster than
they are being replaced. A3
Venezuela’s Maduro
threatened to jail rivals
calling for street protests,
putting talks at risk. A9
A South African report
alleged that a wealthy family influenced Zuma’s cabinet appointments. A10
Germany postponed approval of climate measures,
less than a week before U.N.
global-warming talks. A10
CONTENTS
Arts in Review...... D5
Business News B2-3,8
Crossword................. B6
Election 2016.... A4-6
Global Finance........ C3
Heard on Street.... C8 In the Markets....... C4
Opinion.............. A13-15
Sports.......................... D6
Style & Travel.... D2-4
U.S. News............. A2-3
Weather..................... B6
World News...... A8-11 > s Copyright 2016 Dow Jones &
Company. All Rights Reserved EZRA SHAW/GETTY IMAGES Wells Fargo is facing an
SEC probe over whether it
violated investor disclosures
and other matters relating to
its sales-tactics scandal. C3 EURO $1.1100 YEN 103.31 Banks Fall
Back In
Mortgage
Lending
BY ANNAMARIA ANDRIOTIS The Fed left rates unchanged but sent new signals
it could move next month,
noting that inflation has
“increased somewhat.” A1
Facebook’s profit nearly
tripled as revenue soared
56%, but shares tumbled
after hours due to a caution
about advertising growth. B1 HHHH $3.00 WSJ.com THURSDAY, NOVEMBER 3, 2016 ~ VOL. CCLXVIII NO. 106 FIELD OF DREAMS: The Chicago Cubs took baseball’s crown with an 8-7, 10-inning victory over the Cleveland Indians in an epic Game 7,
ending a drought dating back to 1908. The Cubs overcame a 3-1 deficit in the series. D6, WSJ.com/Sports. Secret Recordings Fueled
FBI Feud in Clinton Probe
BY DEVLIN BARRETT
AND CHRISTOPHER M. MATTHEWS
Secret recordings of a suspect talking about the Clinton
Foundation fueled an internal
battle between FBI agents who
wanted to pursue the case and
corruption prosecutors who
viewed the statements as
worthless hearsay, people familiar with the matter said.
Agents, using informants and
recordings from unrelated cor- dation that started in summer
2015 based on claims made in a
book by a conservative author
called “Clinton Cash: The Untold
Story of How and Why Foreign
Governments and Businesses
Helped Make Bill and Hillary
Rich,” these people said.
The account of the case and
resulting dispute comes from
interviews with officials at
multiple agencies.
Starting in February and
continuing today, investigators New battles erupt over the
‘ballot selfie’......................... A4
Counties reflect contest’s
broader trends.................... A6
Missouri race, like fight for
Senate, is dead heat....... A6
ruption investigations, thought
they had found enough material
to merit aggressively pursuing
the investigation into the foun- from the Federal Bureau of Investigation and public-corruption prosecutors became increasingly frustrated with each
other, as often happens within
and between departments. At
the center of the tension stood
the U.S. attorney for Brooklyn,
Robert Capers, who some at the
FBI came to view as exacerbating the problems by telling each
side what it wanted to hear,
these people said. Through a
Please see FBI page A4 TRUMP’S FOREIGN CONFLICTS Banks no longer reign over
the U.S. mortgage market.
They accounted for less than
half of the mortgage dollars extended to borrowers during the
third quarter—the first quarter that banks, credit unions
and other depository institutions have fallen below that
threshold in more than 30
years, according to Inside
Mortgage Finance. Taking their
place are nonbank lenders
more willing to make riskier
loans banks now shun.
Independent mortgage lenders have come close to the 50%
mark before. But they haven’t
topped it in recent history, even
in the run-up to the 2008 housing bust, making this a notable
moment for the most important consumer-credit market.
The shift reflects banks’
aversion to risk, especially in
the mortgage business, which
has left an opening for independent lenders among home
buyers with lower credit
scores. Banks also remain fearful of legal and regulatory
problems that have cost them
tens of billions of dollars in
mortgage-related fines and settlements in recent years.
The independent firms
aren’t taking on the same sorts
of risky loans that prevailed before the crisis. But their growing role does give rise to potential new dangers in the
mortgage market. Chief among
them is whether nonbanks have
Please see LOANS page A10 Upwardly Mobile
Facebook’s quarterly revenue
and profit soared as its mobile
advertising business grew. B1
Facebook's mobile ad revenue as
a share of total ad revenue
3Q 2016
84% 100% Candidate’s offspring in family firm have long dealt with politically connected concerns abroad
80 BY ALEXANDRA BERZON
Donald Trump’s adult children have
spent a decade doing business with politically connected foreign firms—a role
that will present potential conflicts of
interest whether he wins on Nov. 8 or
continues to pursue politics if he loses.
Those whom Ivanka Trump, Donald
Trump Jr. and Eric Trump have worked
with abroad include: the family of a developer in India who is a ruling-party
politician, an Azerbaijani government Fed Indicates
Rate Increase
More Likely
In December
BY KATE DAVIDSON
Inflation is finally showing
signs of behaving the way
Federal Reserve officials want
it to, bolstering the case for
them to raise short-term interest rates next month.
They decided Wednesday
to leave rates unchanged
while sending new signals
that they could move at their
next meeting, Dec. 13-14.
Inflation has “increased
somewhat since earlier this
year,” Fed officials said in a
statement released after a
two-day policy meeting, noting also that some investors’
expectations of future inflation “have moved up but remain low.”
Officials also said they
wanted to see “some further
evidence” of economic progPlease see FED page A2 minister’s son and a media company
that became the Turkish president’s
outlet of choice during the July 15 coup
attempt.
No recent president has had a portfolio of international business interests
as extensive as Mr. Trump’s—or as
great a level of business engagement
on his behalf by offspring, who have
also played a role in his campaign.
U.S. law exempts the president and
vice president from conflict-of-interest
rules that require many federal em- ployees to recuse themselves from decisions involving their financial interests. Presidents George W. Bush, Bill
Clinton, George H.W. Bush and Ronald
Reagan voluntarily put most assets in
blind trusts. Presidential candidate
Mitt Romney said that, if elected, he
would have created a federally qualifying blind trust.
A President Trump “would not be involved in the business,” said Trump Organization general counsel Alan Garten.
Please see TRUMP page A12 Don’t Tell Texas, but Arkansas
Says It’s America’s Queso Capital
i i i Sales by the gallon and a tourism push
sharpen state’s case; ‘cheese dip for life’ 60
40
20
0
2013 ’14 ’15 ’16 Source: the company THE WALL STREET JOURNAL. Oracle #1
Cloud ERP BY ALISON SIDER When it comes to food, Arkansas has long lived in the
In a safe in Little Rock, shadow of neighbors such as
Ark., restaurateur Scott McGe- Texas, Louisiana and Tenneshee keeps five recipes for see, known respectively for
what he considers one of the their fajitas, gumbo and Memstate’s biggest culinary trea- phis barbecue. Many Arkansans think cheese dip has fisures.
Two cheese-dip recipes nally given them something to
were handed down by his late call their own.
Nick Rogers, a
father, Frank. One
former lawyer now
came from the
working on a doclong-gone Taco Kid
torate in sociology,
chain and cost
presented evidence
$2,000, with hotin his 2009 docusauce and chili formentary “In Queso
mulas thrown into
Fever: A Movie
the deal. The collecAbout Cheese Dip”
tion represents “the
that the world’s
greatest recipes in
Cheese dip
first cheese dip
cheese-dip lore,”
might have been
says Mr. McGehee,
who melded them into the served at Mexico Chiquito, a
“five families cheese dip” North Little Rock restaurant
served at his Heights Taco & chain that opened in 1935 and
Please see QUESO page A12
Tamale Co. in Little Rock. 2,802 228 Oracle Cloud
ERP Customers Workday Cloud
ERP Customers “Oracle has their act together better than SAP”
Aneel Bhusri, Workday CEO Midsize and large scale Enterprise Fusion ERP Cloud customers.
cloud.oracle.com/erp or call 1.800.ORACLE.1
Copyright © 2016, Oracle and/or its affiliates. All rights reserved. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or THE WALL STREET JOURNAL. A2 | Thursday, November 3, 2016 U.S. NEWS How to Salvage Globalization
N o matter what happens in this election,”
venture capitalist Peter Thiel said in Washington
this week, “what Trump represents isn’t crazy and it’s
not going away.”
When it comes to globalization, Mr.
Thiel, a prominent donor to
Republican
nominee Donald Trump, is
CAPITAL
almost cerACCOUNT
tainly right.
GREG IP
Mr. Trump is
unique, but his
antipathy to
free trade and increased immigration isn’t.
Those sentiments are
shared in differing degrees
by the Democratic voters
who propelled Vermont Sen.
Bernie Sanders to second
place in the party’s primary,
by the Britons who voted to
leave the European Union in
June, and in the populist
parties gaining strength
across Europe. Hillary Clinton may have turned against
the negotiated, unratified 12nation Trans Pacific Partnership to fend off Mr. Sanders,
but is unlikely to flip back.
Why spend scarce political
capital on a treaty much of
her party despises?
For advocates, salvaging
globalization requires understanding what’s behind the
backlash. Many populists
think it’s a zero-sum game
that the U.S. is losing. “The
sheer size of the U.S. trade
deficit shows that something
has gone badly wrong,”
claims Mr. Thiel. Actually, it
doesn’t: The U.S. has had one
of the developed world’s
fastest growth rates since
1990 despite that deficit,
while Japan has had one of
the slowest despite a sur- FED
Continued from Page One
ress before raising rates, a
suggestion that the bar for
lifting them has been lowered.
“We fully expect this evidence to emerge over the next
six weeks,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, “so only
a shock—the election of [Donald] Trump or an external geopolitical or market event—can
now prevent a December hike.”
The Fed has left its benchmark federal-funds rate unchanged since December in a
range between 0.25% and
0.5%. Officials started 2016
expecting to raise it by a full
percentage point this year but
held off because of worries
about a variety of risks, including
weak
economic
growth earlier in the year and BARNEYS.COM
NEW YORK
CHICAGO B E V E R LY H I L L S
BOSTON SAN FRANCISCO LAS VEGAS S E AT TLE F O R I N S I D E R A C C E S S : T H E W I N D O W. B A R N E Y S . C O M BORSALINO
DR AKE’S
BARNE YS NEW YO RK Is Free Trade Running Out of Gas?
The number of new trade agreements is slipping, though the share of
global output covered by them is still rising.
Free-trade agreements
By year of signature Share of global GDP covered by
free-trade agreements 50 25% 40 20 30 15 20 10 10 5 0 0
1980 ’90 2000 ’10 1980 plus.
Advocates of free-trade
deals think the real problem
is that the country as a
whole benefits from more
trade and immigration while
only a minority of workers
get hit, blame outsiders and
turn to politicians like Mr.
Trump. Their prescription is
to help that minority transition to new and better jobs.
Yet this may not be an antidote to populism. The economic impact of free trade is
easily overstated. Trade barriers have steadily declined.
This means the gains to incremental liberalization are
quite small—one reason the
number of new pacts has
also been slipping. Two studies conclude the Trans-Pacific Partnership would eventually raise U.S. output by
0.2% to 0.5%, a positive but
hardly life-changing
sum. The gains to Canada
and Europe from the justcompleted Comprehensive
Economic and Trade Agreement are similarly slim.
market turmoil abroad.
While most Fed officials
agree the labor market has improved significantly over the
past year, inflation has run below their 2% target for more
than four years, providing little urgency for raising rates.
Recent data suggest that
may be starting to shift. Socalled core inflation, which excludes volatile food and energy prices, rose 1.7% in the
third quarter from a year earlier, according to the personalconsumption-expenditures
price index, the central bank’s
preferred inflation gauge.
A measure of investors’ expected annual price increases
over the next 10 years hit its
highest level in more than a
year. Policy makers pay close
attention to inflation expectations because they can influence firms’ and households’
spending decisions, which affect actual prices. ’90 2000 ’10 THE WALL STREET JOURNAL. Source: International Monetary Fund Nor is opposition to globalization primarily economic.
“It’s about fairness, loss of
control, and elites’ loss of
credibility. It hurts the cause
of trade to pretend otherwise,” Dani Rodrik, a Harvard University economist
and longtime skeptic of globalization, wrote recently. T reaties like TPP seek to
level the playing field
for firms operating
across borders, for example
in product regulation, settling disputes with governments, and intellectual property protection. Left-wing
populists consider this a surrender of national sovereignty to corporate interests.
Lori Wallach, of the leftleaning advocacy group Public Interest, and Jared Bernstein, a former adviser to
Vice President Joe Biden, recently proposed that U.S.
agreements should henceforth ditch investor-state dispute settlement, constraints
on domestic regulation and
The Fed nodded to these
gains and dropped language it
had used in previous statements that it expected inflation “to remain low in the near
term.”
The Fed’s new assessment
suggests officials are more
confident inflation is moving
toward their 2% goal—setting
the stage for an increase in Some Fed officials
expressed concern
about postelection
market upheaval.
December—but aren’t worried
that it is rising too quickly.
The Fed’s policy committee
“judges that the case for an increase in the federal funds rate
has continued to strengthen
but decided, for the time being, to wait for some further
evidence of continued progress
toward its objectives,” it said.
Officials used similar language in their September
statement but on Wednesday
added the word “some” to indicate how much more evidence they need to see before
moving. The word suggests
they don’t need to see much
more to raise rates.
The committee voted 8-2 to
hold rates steady. Kansas City
Fed President Esther George
and Cleveland Fed President
Loretta Mester dissented, saying they would have preferred
to raise the fed-funds rate by a other features that favor corporations.
This might satisfy some
critics on the left. Similar
concessions by Canada and
the EU overcame opposition
to their deal. But it also
leaves little to liberalize beyond tariffs, which are already quite low. Narrowing
talks down to just that in the
U.S. would make it hard to
get the support of businesses
and Republicans.
For populists on the right,
immigration is a bigger
worry than free trade. But
they too are concerned about
more than just their pocketbooks. Many are bothered
about cultural change, pressure on public services, and
the inability to control the
number of foreign entrants. Support for Mr.
Trump is strong in counties
where the immigrant population has grown most, even as
unemployment falls there.
So stronger wage growth
likely won’t defuse the immigration backlash. What can
help are immigration policies
better tuned to the host
country’s absorption capacity
and labor force needs. Canada supports legal immigration by picking candidates
for language and work skills,
and keeping illegal arrivals
to a minimum. In the U.S., a
deal to legalize the illegal
population will require satisfying skeptics that strong
controls over illegal immigration are in place. B road majorities of the
public still think free
trade and immigration
are good things. The bad
news for globalizers is that
the populists on the right
and left who disagree are increasingly able to stop the
process.
quarter percentage point.
Economic data released
since the Fed’s September
meeting show the labor market has continued to make
progress, while economic
growth has rebounded after a
weak first half of the year.
Employers added 156,000
jobs in September and the unemployment rate rose a tenth
of a percentage point to 5%
because the share of Americans seeking jobs continued
to edge up, the Labor Department said. It is set to release
its October employment report
Friday.
The economy grew at a
2.9% annual rate in the third
quarter, up from 1.4% in the
second quarter, the Commerce
Department reported last
week.
Consumer
confidence
dipped last month after soaring over the summer, but consumer spending remained on
track. Business investment,
while still modest, picked up
in the third quarter.
The decision to stand pat
despite a stronger case for
moving reflected some Fed officials’ concerns about the potential market turbulence that
could stem from the U.S. presidential election on Tuesday.
Wednesday’s
statement
“carries enough room for the
Fed to wriggle out come December if economic and financial conditions change” following the election, said Luke
Bartholomew of Aberdeen Asset Management. CORRECTIONS AMPLIFICATIONS
The name of Ciena Corp.,
which sells optical communications technology, was misspelled as Cienna in a Technology article Wednesday about a
Facebook Inc. effort in that
market. An Off Duty article Saturday about Las Vegas was incorrectly acc...
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