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Exxon to Spend $50 Billion in U.S. Over Next Five Years

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Exxon Mobil
Corp.


XOM -1.11%

 said Monday it plans to spend $50 billion to expand its business in the U.S. in the next five years, investments that were “enhanced” by the American tax overhaul.

The Texas-based energy giant didn’t specify whether the investment plan represented an increase in spending as a result of the tax rewrite passed by Congress and signed into law by President

Donald Trump

late last year, or how much of the $50 billion was tied to prospects Exxon was considering before the tax changes.

Exxon Chief Executive

Darren Woods

made the announcement in a blog post, adding that the company was still studying whether the tax overhaul made additional investment more economically viable.

“We’re actively evaluating the impact of the lower tax rate on the economics of several other projects currently in the planning stages to further expand our facilities along the Gulf Coast,” Mr. Woods said in the post. 

He singled out drilling operations in West Texas and New Mexico as areas where Exxon will be investing billions to boost production. The company has been planning to step up its spending levels in that region for years.

Last year, Exxon spent almost $6 billion to vastly expand its holdings in that area, and the company promised to more than triple its production in the Permian basin and North Dakota through 2025.

Exxon is well known for meticulously planning its build-out of oil and gas projects all over the world, evaluating multibillion-dollar opportunities over many years before making a final decision.

Last year, Exxon said it would spend between $23 billion and $27 billion a year globally from 2018 to 2020. The announcement Monday equates to about $10 billion a year in the U.S. for five years. In 2016 and 2017, Exxon spent about $6 billion a year on U.S. investments, according to the company and analyst estimates.

The $50 billion figure disclosed Monday includes about $15 billion in previously announced projects, such as an initiative to invest $20 billion over a decade along the U.S. Gulf Coast, according to Exxon spokesman Scott Silvestri.

It may be years before the full impact of the new tax law is apparent on Exxon’s strategic planning, but Mr. Woods made clear the company sees the tax cuts in extremely positive terms.

“Good to see sound policy laying the groundwork for America’s future economic success,” Mr. Woods said.

Write to Bradley Olson at Bradley.Olson@wsj.com



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Wal-Mart Tightens Delivery Windows for Suppliers

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Wal-Mart Stores
Inc.


WMT 1.07%

plans to ask suppliers to deliver more goods to warehouses exactly on time or face fines, another step in the retailer’s efforts to keep inventory low and shelves stocked as it battles with

Amazon.com
Inc.

At an annual conference for suppliers this week, Wal-Mart executives plan to announce that large suppliers need to deliver full orders within a specified one- or two-day window 85% of the time or face a fine of 3% of the cost of delayed goods, said

Steve Bratspies

chief merchandising officer for Wal-Mart U.S., in an interview Monday. Previously, suppliers had to hit a 75% threshold to avoid fines. For smaller suppliers the on-time threshold will move to 50%, up from 33%. The change will take effect in April.

“This is not a ‘Hey, let’s see how unreasonable we can be,’” said Mr. Bratspies. “We need the product that the customer wants when they want it.” Wal-Mart would rather have the products on-time than fine suppliers, said a spokesman.

As Wal-Mart,

Kroger
Co.

and other retailers demand tighter delivery windows, suppliers including

Kraft Heinz
Co.

and

Procter & Gamble
Co.

have invested heavily to meet those requirements and make their supply chains more flexible for online buyers. Last February, Wal-Mart executives told suppliers more accurate delivery times would be a focus going forward and first introduced fines for inaccurate deliveries last year.

A more precise delivery window helps Wal-Mart keep shelves stocked and the flow of products more predictable, while reducing inventory, say executives. That goal has become increasingly important to the world’s largest retailer as it pushes to make stores more profitable so it can marshal funds to boost online efforts. In addition, accurate inventory data is more important to retailers as they offer shoppers more ways to buy online and pick up in store.

“They’re trying to get as much inventory as possible off the books,” said

Adrian Gonzalez,

a supply-chain analyst and president of research firm Adelante SCM. “They want to order more frequently and in smaller quantities, and kind of accelerate that whole process.”

That strategy also increases the risk of products being out of stock, and consumer disappointment, Mr. Gonzalez said. “Wal-Mart is trying to balance that
while still making sure the product is on the shelf.”

Empty shelves or otherwise unsaleable products add up to some $75 billion in lost sales a year, according to the Food Marketing Institute, a trade organization.

Nearly 4,000 suppliers are expected to attend the meeting in Bentonville, Ark., where Wal-Mart will outline plans to for the first time widely share with suppliers data on which precise products are on shelves at any given time and why products are out of stock, as well as what products Wal-Mart plans to stock in each store. The additional data, which will become available throughout the year, will help with on-time delivery and “help our suppliers become more efficient and help solve problems,” Mr. Bratspies said.

The tightened delivery window comes as freight costs are soaring for manufacturers and retailers. Many companies are scrambling to book transportation, particularly for time-sensitive deliveries, because demand has outstripped the supply of available trucks. Prices on the spot market, where shippers arrange last-minute transportation, are up more than 20% compared with this time last year. Fuel prices are also rising, adding to costs.

“Trying to find a truck in today’s environment is next to impossible,” said Cathy Roberson, an analyst with Logistics Trends & Insights LLC. “Fuel surcharges are going up and the suppliers are going to have to pay all of this.”

Write to Sarah Nassauer at sarah.nassauer@wsj.com and Jennifer Smith at jennifer.smith@wsj.com



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Keurig-Dr Pepper: Why Coffee and Soda Might Just Mix

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In Dr Pepper Snapple, Keurig Green Mountain is buying a drinks company—and, just as importantly, a currency to keep the deals flowing.

The unusual deal announced Monday involves Keurig paying Dr Pepper shareholders not just $103.75 a share, or $18.7 billion—8.5% more than last Friday’s market value—but also a share in the combined company, Keurig Dr Pepper. Exactly what that share will be worth is the key question for investors in the short term. Dr Pepper Snapple shares jumped 25% to $120 in early-afternoon trading.

…



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Wynn Resorts Is the Biggest Test for Investors' Tolerance

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The price of sexual misconduct accusations has never been higher.

Wynn Resorts


WYNN -9.32%

has lost $3 billion in market value since its founder and chief executive was accused by former employees of behavior that would amount to a decadeslong pattern of sexual misconduct. The situation is unique because of

Steve Wynn’s

role as CEO and his outsize importance to Wynn Resorts. “He is the company,” industry executives and analysts say.

Indeed, Wynn Resorts, which includes its signature hotels in Las Vegas, two casinos in Macau and a $2.4 billion project scheduled to open next year in Boston, is nearly impossible to separate from the man. This puts investors in a quandary—whether to sell now, demand the ouster of a CEO who made them big profits or support Mr. Wynn, whom many of them have in the past praised as a visionary leader.

Think

Steve Jobs

to Apple, or

Phil Knight

to

Nike
.

Mr. Wynn is integral not only to the company’s brand, but to the casinos’ design, development, and licensing. Harvey Weinstein comes close in terms of an executive’s value to a company, but the film studio founded by Mr. Weinstein and his brother was privately held. Bill O’Reilly and Matt Lauer were valuable media stars, to be sure, but ultimately of only modest importance to the behemoths that employed them,

21st Century Fox

and

Comcast
,

respectively.

Mr. Wynn is the first founder and chief executive of a major publicly traded company to be accused of sexual misconduct in the recent wave of allegations. The Wall Street Journal reported that in 2005 a manicurist who worked at Wynn’s hotel told co-workers that he had forced her to have sex and beyond that reported incident, dozens of people who have worked for Mr. Wynn’s casinos described a pattern of sexual misconduct. Mr. Wynn said it was “preposterous” that he would assault a woman. He didn’t provide further response to other allegations of sexual misconduct.

The company’s stock dropped 10% on Friday after an article about the accusations in the Journal and shares fell another 5% on Monday.

But will he be pushed out? The board and investors will weigh whether keeping Mr. Wynn would be better for the company’s long-term value than firing him, and whether any value that is created is worth the hit to its reputation. In a securities filing before the Journal’s report, the company cited the loss of Mr. Wynn as one of the biggest risks to the business: “If we lose the services of Mr. Wynn, or if he is unable to devote sufficient attention to our operations for any other reason, our business may be significantly impaired.” It is hard to say whether casino-goers will shun Wynn properties if he stays; these are casinos, after all.

The Wynn situation is also unique because the casino industry is so heavily regulated. Nevada gaming regulators have typically focused more on historic risks such as mob influence or corruption than on sexual harassment. But a recently appointed top regulator there has said the Nevada Gaming Control Board is “reviewing the information.” Under state regulations, she could cite character as a consideration in the granting of casino licenses, though that would be an unusual step.

Massachusetts may be more important. Following the Journal’s report, the Massachusetts gambling regulator, which granted the company a casino license in 2014, has opened a regulatory review of Wynn. The company has said it “will be fully cooperative with any review the commission chooses to undertake.”

The company’s best bet may be to sell, or to break up, regardless of whether Mr. Wynn stays. But the company is seen as hobbled. Weakness in the stock could make the company a strategic asset for players looking to grow.​

Mr. Wynn won’t go quietly. He claims the accusations are part of the litigation strategy of his ex-wife,

Elaine Wynn,

who is seeking to lift restrictions on the sale of her stock in Wynn Resorts. (She says the notion that she is responsible for the Journal’s article is “just not true.”)

After the Journal published its report, Maurice Wooden, president of Wynn Las Vegas, sent a letter to employees reiterating support for Mr. Wynn and lamenting that “the news media has been used to assail Mr. Wynn and us in this way.”

Mr. Wynn is likely to fight to keep control of the company. He started Wynn Resorts in 2000 after he lost control of

Mirage Resorts
Inc.,

which he had founded and used to transform the Las Vegas Strip. The loss of Mirage was traumatic for Mr. Wynn.

To start Wynn Resorts, he turned to Japanese pachinko king

Kazuo Okada

for funding. Mr. Okada and Mr. Wynn both controlled 20% of the company until Mr. Wynn’s divorce, when he divided his stake with Ms. Wynn.

In 2012, after Mr. Wynn’s stake had fallen and Mr. Okada became Wynn’s biggest shareholder, the company forcibly redeemed Mr. Okada’s stake. The company accused Mr. Okada of corruption, and Mr. Okada called the move an unmerited power grab.

Mr. Okada sued to get back his shares. Now, with Mr. Wynn under fire, the case is set for trial in April, according to Wynn’s most recent quarterly securities filing.



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China's Xi Looks to Ally to Fix U.S. Relations

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BEIJING—President

Xi Jinping

is turning to a trusted political ally who ran his potent anticorruption campaign to help manage the critical but fraught relationship with the U.S. as trade tensions escalate, according to officials familiar with the leadership’s thinking.

Wang Qishan,

who stepped down from the leadership in October after hitting an unofficial retirement age, is being considered by Mr. Xi for several roles, including as state vice president, the officials said.

On Monday, the 69-year-old Mr. Wang’s career as a senior official was extended when he was named a deputy to the national legislature, a rare position for an elder official after exiting the leadership.

Part of Mr. Wang’s charge, whether as vice president or as an adviser in some other capacity to Mr. Xi, would be to handle relations with the U.S., the officials said.

In recent months, Mr. Wang has met with former Treasury Secretary

Henry Paulson

and other U.S. business leaders he has known in more than two decades as a Communist Party insider. At one such meeting, just ahead of his retirement, Mr. Wang used what he dubbed an “old friend” session to pepper a visiting U.S. financier about President

Donald Trump,

according to people in attendance.

“Is Trump a rare phenomenon, or a trend?” asked Mr. Wang, these people said.

Mr. Wang is known as the “fireman” in China for his long career of handling emergencies and his enlistment on U.S. relations is a sign of how unsteady Beijing sees relations under Mr. Trump, said the officials familiar with the leadership’s thinking.

“Wang is tough,” one of the officials said. “You need someone like that to deal with the Americans.”

Under the “America First” banner, Mr. Trump and his aides are unrolling a tougher China policy to address what they call Beijing’s unfair trade practices.

Last week, the Trump administration fired a trade shot at China by levying steep tariffs on Chinese solar panels. The U.S. has set in motion several studies and proceedings that could lead to sanctions on China involving intellectual property and trade in steel and aluminum.

The Chinese government’s information office didn’t respond to a request for comment on Mr. Wang. Mr. Xi oversaw a shuffle of top Communist Party posts in October, and China’s legislature is slated to approve top government appointments in March.

For the past five years Mr. Wang ran the wide-ranging, politically treacherous antigraft crackdown that helped Mr. Xi cement his power.

The vice presidency, though a ceremonial position, would give Mr. Wang a title, a staff and a justification for engaging with foreigners, officials and China politics experts said.

Mr. Wang has forged relations with many influential Americans since the late 1990s, when he was put in charge of handling China’s largest bankruptcy, facing down angry foreign creditors. A decade later, he led annual economic talks with the U.S., opposite then-Treasury Secretary

Timothy Geithner.

When Wang Qishan was promoted to vice-premier in charge of economic relations in 2008, he was credited by U.S. officials with convincing senior Chinese leaders to let the yuan start to float somewhat, beginning in June 2010, a longtime U.S. aim.

“When Wang Qishan stepped down as vice premier, he told his American counterparts that he was always available to meet informally—he told them that if they removed their neckties, ispo facto, that made the meeting unofficial and he would be delighted to see them as an old friend,” said Daniel Russel, who served as the top State Department Asia official during President

Barack Obama’s

second term, and said he heard about that offer directly from Mr. Wang.

Mr. Russel, now a senior fellow at the Asia Society Policy Institute, said that Mr. Wang through the fall of 2017 met with a number of “old friends” who had been top U.S. government officials.

“There’s a trail of breadcrumbs that leads toward the conclusion that Wang Qishan is someone in whom the core leadership has faith, on whom they rely, both for insight into, and practical dealings with, Americans,” he said.

Chinese officials in recent weeks have been steering Americans influential on China issues to see Mr. Wang when they travel to Beijing.

“It was clear from conversations with various Chinese officials that Wang Qishan will continue to have a very important role and Xi Jinping’s ear on matters’ involving U.S.-China relations and other global issues,” said Myron Brilliant, the U.S. Chamber of Commerce’s executive vice president, who recently returned from a trip to China where he met senior officials, though not Mr. Wang.

Other senior officials involved in dealing with Americans would include

Hu Chunhua,

who is expected to be named vice premier overseeing trade, and Liu He, Mr. Xi’s top economic aide, who is slated to become the vice premier in charge of finance and state-owned enterprises.

Yang Jiechi,

State Councilor in charge of foreign policy, and Foreign Minister

Wang Yi

are also expected to continue to be involved in foreign affairs.

The post he was given on Monday allows him to take part in deliberations of the legislature, but doesn’t signify any particular authority.

Trump administration officials said they hope the potential appointment of Mr. Wang and other officials they consider economic reformers would give a push to liberalization efforts in China.

But they said they are looking to China to make substantial changes in policy, and believe past administrations were too willing to accept promises and incremental changes to keep relations on an even keel.

Chinese officials have told visiting Americans that they are surprised at the U.S.’s tougher stance after an amicable, pomp-filled summit between Messrs. Trump and Xi in Beijing in November. During recent meetings between Mr. Xi’s economic deputies and U.S. officials, the two sides couldn’t agree on what to talk about, according to people involved in the discussions.

While U.S. officials wanted to focus on specific ways U.S. companies can gain better access to the Chinese market, the Chinese side kept stressing the need to put in place a “mechanism,” saying that would help both sides to move in the same direction, these people said.

“The U.S. is not interested in mechanisms,” said a person involved in the discussions. “Trump wants major breakthroughs.”

For instance, Beijing’s recent pledge to let foreign securities firms own 51% of their Chinese ventures is seen as falling well short of the U.S. demands for no cap on ownership.

“The asking price is too high,” said a Chinese official, referring to the U.S. requests.

Chinese officials are analyzing what the costs would be of a trade war with the U.S., according to people familiar with the matter. The officials are pressuring American businesses to warn Washington against moving in that direction, and putting in place tit-for-tat measures to counter possible U.S. actions.

Finance Minister

Xiao Jie

is planning to meet with U.S. officials next month with a goal of resuming a dialogue on trade and economic issues that stalled last summer, according to people familiar with the matter.

Treasury officials said they would talk—but administration officials have said they are looking more toward sanctions than negotiations.

“We’re not at a stage where we could restart negotiations,” said U.S. Treasury undersecretary

David Malpass.

“The challenge from China is continuing to be problematic in terms of their trade policies, state-owned enterprise and investment policies.”

—Jacob M. Schlesinger in Washington contributed to this article.

Write to Lingling Wei at lingling.wei@wsj.com and Bob Davis at bob.davis@wsj.com



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Dollar's Drop Fuels a Fire That's Already Raging

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A weak dollar has been great for markets. A much weaker dollar could be too much of a good thing.

The decline in the U.S. dollar in 2017—down 10% on ICE’s index—accompanied stronger global growth, in particular in Europe, and spurred risk appetite nearly everywhere. A broad measure of stocks around the world, the MSCI ACWI developed- and emerging-market stock index, rose 21.6% last year.

But last week’s quick-fire moves in the dollar might offer reason for caution in the longer run. The currency fell and rose rapidly as Treasury Secretary

Steven Mnuchin,

European Central Bank President

Mario Draghi

and President

Donald Trump

all weighed in with conflicting takes on foreign-exchange rates.

The end result is a sharply weaker dollar, and confusion. That might not sound like so much of a problem: if it was good news in 2017, why not now? But the pace and bumpy nature of the move should be watched. The trend for a lower dollar was already clear. But the conflicting discourse may fuel broader concerns about U.S. policy on trade. Mr. Draghi said worries among eurozone central bankers went beyond the exchange rate to cover the “overall status of international relations right now.”

Investors don’t appear fazed. Stocks are up, corporate-bond yield spreads have compressed from already tight levels, and a modest rise in government-bond yields hasn’t derailed markets.

But a further rapid fall in the dollar may yet cause headaches for central bankers who have created the conditions in which markets are partying. In the U.S., financial conditions have been loosening even as the Federal Reserve lifts rates. At some point, that might cause a reappraisal of policy, potentially upsetting markets that have come to rely on the idea that U.S. rates will peak much lower than in the past.

Meanwhile, a much weaker dollar could spur further risk-taking in markets where worries about valuations are already rife. The move up in stocks has accelerated in 2018, with the MSCI ACWI up another 7.3% already. That might bring more debate about the risk of financial-market instability: after many years in which ultraloose monetary policy appeared not to bring dividends, it is suddenly having a turbocharged effect. Despite the acceleration in global growth and buoyant markets, even U.S. policy rates are still negative in real terms.

The dollar’s decline thus bears watching. If the pace of the decline were to moderate, and be matched by strong global growth, then it is more benign. Otherwise, the dollar could test markets in unexpected ways.

Write to Richard Barley at richard.barley@wsj.com



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On Trade, World Wonders Whose Rules U.S. Plays By

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President Donald Trump and his cabinet secretaries set out in Davos last week to soothe the anxieties of business elites and world political leaders fearful of U.S. protectionism.

The message: The U.S. still believes in the World Trade Organization, it isn’t surrendering leadership and nobody wants trade wars. After saying a weak dollar was good for U.S. trade, Treasury Secretary Steven Mnuchin reassured the world the U.S. stood by its longstanding commitment against competitive devaluation. In his address Friday Mr. Trump…



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China's Xi Looks to Ally to Fix U.S. Relations

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BEIJING—President Xi Jinping is turning to a trusted political ally who ran his potent anticorruption campaign to help manage the critical but fraught relationship with the U.S. as trade tensions escalate, according to officials familiar with the leadership’s thinking.

Wang Qishan, who stepped down from the leadership in October after hitting an unofficial retirement age, is being considered by Mr. Xi for several roles, including as state vice president, the officials said.

…



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