The Wall Street Journal - 30.07.2019

A2| Tuesday, July 30, 2019 **** THE WALL STREET JOURNAL.

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U.S. WATCH

tine replacement. The National

Transportation Safety Board is

still investigating.

The agreement announced

Monday is separate from an

$80 million settlement reached

in May with the three commu-

nities to address infrastructure

damage.

—Associated Press

NEW JERSEY

Law Restricting

Bullets Is Upheld

A federal judge upheld New

Jersey’s law that lowers the

number of bullets a gun can

hold, dismissing a lawsuit filed

by a gun-rights group.

New Jersey passed a law

last year that made it unlawful

to possess firearm magazines

holding more than 10 rounds of

ammunition, with some excep-

tions. The state has said that is

enough for self-defense and

that anything more could prove

dangerous to bystanders. A 15-

round limit had been in place

since 1990.

The Association of New Jer-

sey Rifle and Pistol Clubs ar-

gued that the law only hurts

law-abiding gun owners and

homeowners because criminals

will ignore it, and plans to ap-

peal.

U.S. District Court Judge Pe-

ter Sheridan based his ruling

Monday on a lower court’s con-

clusion that New Jersey’s law

doesn’t violate the Second

Amendment, the Fifth Amend-

ment’s Takings Clause, and the

14th Amendment’s Equal Pro-

tection Clause.

—Associated Press

CLEMENCY

Trump Pardons Five,

Commutes Sentences

President Trump commuted
the prison sentence of an Arkan-
sas man convicted of bribery and
a Florida man convicted of distrib-
uting synthetic marijuana, and
pardoned five other people, in-
cluding two convicted of drug of-
fenses.
Ted Suhl was convicted in
2016 on federal bribery charges
related to a scheme to boost pay-
ments for his faith-based behav-
ioral health-care center for juve-
niles and sentenced to seven
years in prison, the White House
said on Monday. “He has been a
model prisoner while serving his
sentence, maintaining a spotless
disciplinary record,” the White
House said.
Mr. Trump also commuted the
prison sentence of Ronen Nah-
mani, who was convicted in Flor-
ida in 2015 for conspiring to dis-
tribute synthetic marijuana and
sentenced to a maximum of 20
years in jail. The White House
said he was a nonviolent, first-
time offender with five young
children and a wife who has ter-
minal cancer.
Mr. Trump also granted full
pardons to John Richard Bubala,
Roy Wayne McKeever, Rodney
Takumi, Michael Tedesco and
Chalmer Lee Williams.
Mr. Trump previously pardoned
10 people, according to the Jus-
tice Department, including I. Lewis
“Scooter” Libby, who had served
as a top aide to Vice President
Dick Cheney, and the conservative
commentator Dinesh D’Souza.
—Andrew Restuccia

FLORIDA

Shooting Probed as

Possible Hate Crime

Authorities said Monday they

have yet to determine whether

the weekend shooting of a

member of a Miami area syna-

gogue constituted a hate crime.

Police are still searching for the

suspect after the attack outside

the temple’s front door.

The victim, identified by the

rabbi as temple member Yosef

Lifshutz, was shot several times

in the legs Sunday evening and

underwent surgery at a hospital,

police said. He was listed in stable

condition at Aventura Hospital.

The Miami-Dade State Attor-

ney’s Office’s hate crimes unit is

reviewing the case, spokes-

woman Lissette Valdes-Valle

said Monday.

—Associated Press

MASSACHUSETTS

Settlement Reached

On Gas Explosions

Class-action lawsuits stem-

ming from natural-gas explo-

sions in Massachusetts have

been settled for $143 million,

the utility blamed for the disas-

ter and lawyers for the plain-

tiffs said Monday.

The settlement is subject to

the approval of a judge, accord-

ing to Columbia Gas of Massa-

chusetts, and its parent,

NiSource Inc.

The Sept. 13 explosions and

fires in Lawrence, Andover and

North Andover killed one per-

son, injured about 25 others,

and damaged or destroyed

more than 100 buildings.

The explosions were blamed

on an overpressurization of gas

transmission lines during rou-

HOISTED TO SAFETY: A construction worker who was trapped after a trench collapsed was freed by rescuers in Minneapolis on Monday.

ELIZABETH FLORES/STAR TRIBUNE/ASSOCIATED PRESS

facing pressure from abroad to

produce more local content.

Australia on Monday was the

latest country to say it was

considering such require-

ments, joining policy makers

from Europe, Asia and Africa.

The pressure to boost over-

seas content comes as Netflix

is dealing with more competi-

tion in the U.S. Earlier this

month, the company’s shares

fell more than 10% the day af-

ter it disclosed that it lost

subscribers in the U.S. for the

first time in nearly a decade,

adding pressure to create at-

tractive programming.

Netflix has been picking up

many film projects Hollywood

studios didn’t see as commer-

cially viable at the box office,

at least at the same budgets.

Recent examples include San-

dra Bullock’s post-apocalyptic

movie “Bird Box” and the heist

flick “Triple Frontier,” starring

Ben Affleck. Neither was a

standout with critics, but

“Bird Box” drew 80 million

viewers during its first month

and “Triple Frontier” has been

watched 63 million times since

its March release, the com-

pany said, making them Net-

flix’s first and fifth most popu-

lar original films, respectively.

Netflix bought the rights to

“The Irishman” after major

studios passed because of con-

cerns that it was too expen-

sive for a drama, a genre that

has struggled at the box office

in recent years. The producers

were raising independent

funds to make the film when

Netflix entered. “Without Net-

flix, ‘Irishman’ would not have

been made,” said one of the

people close to the movie.

Big action films such as

“Red Notice” more frequently

succeed at the box office.

Comcast Corp.’s Universal Pic-

tures was set to make the

movie for $150 million, but af-

ter production costs rose

higher than originally planned,

the studio allowed the proj-

ect’s producers to shop it else-

where, a person with knowl-

edge of the sale process said.

Other major studios such as

AT&T Inc.’s Warner Bros.

passed, concerned the film

would be too costly, people fa-

miliar with the talks said.

Netflix, however, wanted to

make a splash with a big-bud-

get action-adventure film, one

of the few genres in which it

hasn’t yet found success. “Red

Notice,” expected to come out

in 2021, has the potential to

spawn sequels and spinoffs if

it is successful, the person

with knowledge of the sale

process said.

Movies typically cost Net-

flix more to make than Holly-

wood studios, because it pays

A-list actors and filmmakers

more up front to compensate

for the fact that it doesn’t of-

fer a share of revenue from

box-office and DVD sales.

Those extra costs totaled $

million on “The Irishman” and

$40 million on “Red Notice,”

people close to the pictures

said. Netflix’s approach to

compensation means A-list ac-

tors and directors are guaran-

teed more up front than at a

studio, but earn less than they

would have if the movie were

a box-office smash.

Netflix hasn’t yet deter-

mined theatrical release plans

for “Red Notice,” said one of

the people close to that pic-

ture. The streaming company

plans to release “The Irish-

man” in theaters by year-end.

Netflix releases most of its

movies only on its service.

ages. People close to the pic-
ture said Netflix’s total com-
mitment is at least $173 mil-
lion, while others close to the
film offered estimates above
$200 million, making “The
Irishman” the most expensive
adult drama in recent history.
Netflix has previously said
movies attract about one-third
of its total viewership, while
television series account for
the rest. It is betting the new
productions will help retain its
more than 150 million existing
subscribers and attract new
ones, whose monthly fees—
rather than ticket sales—gen-
erate the company’s revenue.
Analysts expect Netflix to
spend $15 billion on program-
ming this year. The company
has been borrowing billions of
dollars as it accelerates efforts
to stock its library with fresh
content.
Netflix and other video-
streaming players have been

Continued from Page One

Netflix

Invests in

Big Films

Netflix has picked

up projects studios

didn’t see as viable

at the box office.

U.S. NEWS

to move proactively to keep

price pressures in check and

prevent asset bubbles from

forming.

Today, officials worry that

inflation pressures remain too

weak, not too strong. This de-

velopment implies that the so-

called neutral rate level that

neither stimulates nor curbs

economic growth is lower than

in the past. And lower rates

leave the Fed less space to cut

them to combat a slowdown.

Mr. Powell told lawmakers

this month he is concerned

about an “unhealthy dynamic”

in which “lower expected in-

flation gets baked into interest

rates, which means lower in-

terest rates, which means less

room for the central bank to

react” to downturns.

To avoid this trap, Fed offi-

cials say they need to fight

harder to raise inflation now,

when the economy is good.

“We’ve seen it in Japan. We’re

now seeing it in Europe,” said

Mr. Powell. “That road is hard

to get off.”

The Fed targets 2% inflation

as a sign of healthy growth

across the economy but has

failed to convincingly reach

the goal since formally adopt-

ing it in 2012.

After holding around 2% as

recently as December, inflation

has slowed this year. Exclud-

ing volatile food and energy

categories, consumer prices

rose 1.5% in the second quar-

ter from a year earlier, accord-

ing to the Fed’s preferred

gauge.

While this might seem like

a small miss, officials expected

any surprises would be run-

ning in the other direction by

this point in the decadelong

expansion.

Fed officials are prepared

to lower their benchmark

rate by a quarter percentage

point from its current range

between 2.25% and 2.5%. A

rate cut also could end the

runoff of the Fed’s $3.8 trillion

asset portfolio, which already

was set to occur after Septem-

ber.

Worries about inflation are

one reason officials could sig-

nal openness to cutting rates

again later this year. Chicago

Fed President Charles Evans

said this month rates would

need to go down by at least a

half-point from current levels

to boost inflation. Seven of the

17 participants at the Fed’s

June meeting projected the

central bank would need to

lower rates by a half-point by

year’s end.

New York Fed President

John Williams said an impor-

tant lesson of recent research

is that when confronted with

weakness, policy makers need

to “vaccinate the economy and

protect it from the more insid-

ious disease of too low infla-

tion.”

At the heart of the reversal

facing the Fed is a rethink of

its fundamental policy strategy,

which has been rooted in the

economic idea that a short-run

trade-off exists between unem-

ployment and inflation.

At some low rate of unem-

ployment, the thinking goes,

slack in the job market disap-

pears. Wage and price pres-

sures build, as firms compete

for scarce resources.

The problem is that there is

no way to identify the cutoff

point, or what economists re-

fertoasanaturalrateofun-

employment where inflation is

stable over the long run.

Such predictions are impre-

cise and move around depend-

ing on what else is happening

in the economy.

The natural rate is “sub-

stantially lower than we

thought in the past,” Mr. Pow-

ell told lawmakers earlier this

month. Moreover, the rela-

tionship between declining

unemployment and rising in-

flation “has become weaker

and weaker and weaker,” he

said.

A rate cut this week would

underscore how, in the ab-

sence of the domestic pres-

sures that normally would jus-

tify tighter monetary policy,

the global economy will play a

far greater role than before in

shaping the Fed’s decisions.

Mr. Powell outlined this

new thinking in a speech in

Paris two weeks ago. “Pursu-

ing our domestic mandates in

this new world requires that

we understand the anticipated

effects of [global] intercon-

nections and incorporate them

into our policy decision-mak-

ing,” he said.

Federal Reserve Chairman
Jerome Powell is leading his
colleagues to cut interest rates
this week for the first time
since 2008, even though the
economy looks healthy, partly
because it isn’t behaving as
expected.
Both inflation and market-
determined interest rates are
still lower than some of their
models would have forecast,
given years of strong hiring
and solid economic growth.
These developments sug-
gest that Fed officials haven’t
been providing as much sup-
port to the economy as they
had thought, even though
their benchmark rate is low by
historical standards.
Moreover, some officials
believe the rate needs to be
even lower now to provide an
extra cushion amid a darken-
ing global outlook clouded by
trade-policy uncertainty.
Fed leaders see tighter link-
ages than in the past between
the U.S. and global economies
and think domestic rates can’t
rise much higher above those
in other advanced economies,
which have much lower or
even negative rates.
Their thinking marks a shift
from recent years when they
were raising the rate from
near zero because their mod-
els held that falling unemploy-
ment eventually would fuel
rising inflation. They wanted

BYNICKTIMIRAOS

Fed Is Poised to Cut as Thinking Shifts

Trump Wants Rate

To Go Even Lower

WASHINGTON—President

Trump said the Federal Reserve’s

expected small interest-rate cut

this week isn’t enough, but he

expressed optimism that the

country would do well regardless

of what is decided.

In tweets on Monday morn-

ing, the president accused the

U.S. central bank of making “all

the wrong moves” and said

that Fed officials were leaving

the U.S. vulnerable to global

competitors like the European

Union and China.

“We are competing with

other countries that know how

to play the game against the

U.S.,” he wrote. “A small rate

cut is not enough, but we will

win anyway!”

In an earlier tweet, Mr.

Trump said that the EU and

China continue to lower their

interest rates and pump money

into their systems, making it

easier for their manufacturers

to sell products.

“In the meantime, and with

a very low inflation, our Fed

does nothing—and probably will

do very little by comparison.

Too bad!” he tweeted.

Mr. Trump also tweeted

that the Fed raised rates too

early and by too much, adding

that the Fed’s decision two

years ago to slowly shrink its

$3.8 trillion asset portfolio,

which some refer to as quanti-

tative tightening, has also been

responsible for tighter mone-

tary policy.

“While our country is doing

very well, the potential wealth

creation that was missed, espe-

cially when measured against

our debt, is staggering,” he

wrote.

The Fed is expected to

lower its short-term benchmark

rate, currently between 2.25%

and 2.5%, by one-quarter per-

centage point after its two-day

meeting ends on Wednesday.

Mr. Trump has said the Fed

should cut its benchmark rate

by 1 percentage point. He also

wants the Fed to terminate the

runoff of its $3.8 trillion asset

portfolio. The runoff is set to

end after September, but Fed

officials could end the runoff

this week when they cut rates.

Mr. Trump has commented

more on Fed policy, in public re-

marks and on Twitter, during

July than in any prior month of

his presidency.

—Vivian Salama

In some editionsSaturday,

a Page One article about Presi-

dent Trump’s criticism of

China and the World Trade Or-

ganization omitted U.S. Trade

Representative Robert Lighthi-

zer’s first name and title.

Sen. Bernie Sanders of

Vermont gave a speech about

health care this month at

George Washington University.

A U.S. News article Monday

about Democratic presidential

candidates’ positions on Medi-

care for All incorrectly said he

spoke at George Mason Uni-

versity.

Readers can alert The Wall Street Journal to any errors in news articles by

[email protected] by calling 888-410-2667.

CORRECTIONSAMPLIFICATIONS