Former and current employees of Sears Canada have filed a legal motion in an attempt to stop dozens of company executives from splitting $7.6 million in retention bonuses while many laid-off workers miss out on severance payments.

In court documents, lawyers for the employees call the bonus pay “excessive” after 2,900 employees from 59 stores were let go in June.

If the payment goes through, 43 executives would take home bonuses.

A spokesperson for Sears Canada said these sorts of payments are common in restructuring and necessary to keep executives in the business.

But former Sears Canada CEO Mark Cohen told CTV News the workers deserve more support from their employer.

“I would protect the employment of the folks working in stores. I don’t know that I would protect the employment of executives who, frankly, are in no small measure responsible for this problem,” Cohen said.

After news of the layoffs, numerous stories emerged of long-time employees suddenly being given pink slips. Josee Nadeau, a sales associate for more than 30 years, was out of a job with no severance pay.

“Zero, zero. Nothing,” Nadeau said.

Sears Canada has been dealing with a serious image problem since the layoffs. The hashtag #BoycottSearsCanada began trending on Twitter, and the company’s Facebook page has stopped allowing public posts.

Auto sales are expected to experience the biggest drop of the year in July, according to the latest analysis from Edmunds. The pressure is on manufacturers to increase incentives to help sell the remaining 2017 models.

The expert analysts at Edmunds forecast that 1,423,097 new cars and trucks will be sold in the U.S. in July. That represents a 3.1 percent decrease in sales from June 2017 and a 6.2 percent decrease from July 2016.

“July is historically a strong month, but with disappointing sales and inventories still building, something needs to give,” said Jessica Caldwell, Edmunds executive director of industry analysis. “A lot is riding on late-summer sales events to help move vehicles before 2018 models start arriving at dealer lots.

“Production slowdowns will help address some of the inventory issues, but consumers may be waiting for automakers to loosen the purse strings on incentives to get them to pull the trigger on making a purchase,” Caldwell said.

Edmunds also estimates that 3.4 million used vehicles will be sold in July 2017, up from 3.2 million last month.

LinkedIn has 500 million profiles online, an extraordinary wealth of information about the education and career paths of nearly 7% of all of humanity—and an absolute treasure trove for companies that build recruitment and human resources software. One of them is hiQ Labs, a startup that scrapes LinkedIn data to build an algorithm to predict whether employees will quit.

HiQ relies on the small portion of Linked profiles that are publicly available, and sells its products to employers looking to precent their best workers from jumping ship. It’s suing LinkedIn—now a unit of Microsoft—to ensure it keeps access to the data, a preemptive strike after LinkedIn sent hiQ a cease-and desist letter in May, according to the Wall Street Journal (paywall).

LinkedIn says its data is proprietary, and says that hiQ violates hacking statutes by scraping its data. HiQ says LinkedIn is stretching the definition of the law, and is asking a federal judge to declare it has acted legally.

LinkedIn argues hiQ is violating the trust LinkedIn users place in the site. HiQ’s algorithm scours LinkedIn pages for profiles that have recently been updated, a sign that the person behind the profile may be looking for a new gig. “If LinkedIn members knew that hiQ was accessing and collecting their data in this manner, many would not update their profiles,” LinkedIn told the courts, according to the Journal

In an email to Quartz, hiQ CEO Mark Weidick said LinkedIn is trying to muscle into its business:

I’m a huge fan of the idea behind LinkedIn and always have been. I’ve been found, and found people, through the information we all choose to make public on LinkedIn. We understand LinkedIn wants to get into our business, and that’s fine. But LinkedIn is trying to illegally force out a smaller competitor so that they can have the business for themselves, plain and simple.

As social media sites like LinkedIn and Facebook grow to gargantuan size, they’re attracting smaller companies that feed off them, like the remora that cling to the bellies of a great white shark. Often the parasite goes unnoticed, until it makes a pest of itself.

LinkedIn is in the odd position of arguing that web pages available to the public are not, in fact, public after a third party has figured out how to make money off them. It’s not unlike when Major League Baseball tried to declare that the statistics its players generated were its intellectual property, only after fantasy sports sites began to cash in on them.

Since the 1950s, department stores like Sears and JC Penney have anchored suburban shopping malls. But hundreds of chains are expected to soon close their doors. Sears, an iconic mall mainstay, is shuttering over 300 locations in the US by the end of 2017, and JC Penney also recently said it will close 138 stores due to waning traffic and sales.

Now, a different type of company is moving into their vacated spaces: grocery stores.

“Food retail is one thing helping struggling malls survive,” June Williamson , an architecture professor at the City College of New York and an author of “Retrofitting Suburbia,” tells Business Insider.

Kroger, the nation’s largest grocer with nearly 4,000 locations, recently purchased a former Macy’s at Kingsdale Shopping Center in Upper Arlington, Ohio for $10.5 million, not long after the department store announced it would close the 45-year-old location.  365 by Whole Foods (a smaller, more economical version of the well-known chain) will open at College Mall in Bloomington, Indiana in late 2017, according to Indiana Public Media.

And Wegmans Food Market is moving into a former JC Penney at the Natick Mall in Massachusetts. The shop is set to open in in 2018. The grocer decided to move into the mall because the vacant department store has a large square footage, a loading dock, high ceilings, and ample parking, Wegmans spokesperson Valerie Fox told Business Insider. The mall’s location, near a number of housing developments, is also convenient for shoppers.

Wegmans already operates a location in Montgomery Mall in Pennsylvania, and plans to moveinto a former Sears at Landmark Center in Fenway, Massachusetts by 2019. In late 2016, the company also signed a 25-year lease as the anchor tenant at the struggling Meadow Glen Mall in Medford, Massachusetts.

“Because our business model is predicated on high volume, we need a lot of customers to shop in our stores,” Fox said, regarding the decision to move into Natick Mall. “While we don’t specifically seek out shopping malls, we consider them if they meet the things we’re looking for … Natick Mall met all our criteria for a store site.”

P/C FLICKR

Melissa, a resident of San Diego with degrees in psychology and Spanish, could find work only at a fast-food restaurant, recounted an article in (of all places) the Los Angeles Times about how some conservatives fed up with California are looking to Texas for greener pastures — and not just economically. The final straw for Melissa was when her daughter came home from public school one day with a young adult novel as homework. The book celebrated the use of cigarettes and pills to cope with stress, and Melissa decided it was time to leave the Golden State.

She found Conservative Move, a website just launched to help Californians find a home in north Texas. She was one of the first of more than 3,700 visits to the website, which just started in May. Paul Chabot, a family man with four children who runs the website, explained:, “It began shortly after my wife and I decided to leave California in January of this year. We wanted a better life for our four young children and we found it in Texas. Our only regret was not doing it sooner.”

Appropriately, his company’s slogan is “Helping families move Right.”

Chabot connected Melissa with a realtor in Collin County, in north Texas. She sold her home in San Diego for $500,000, bought a new one in McKinney for $340,000, and loves it: “I’m so over California, I can’t see straight,” she said. “You can get more land [here] than I’ve ever seen. What was I thinking to stay [in San Diego] so long as I did? I feel like I’ve stepped into another world.”

Melissa may not be aware of it, but in the latest skirmish between California, the nation’s most populous state, and Texas, with the nation’s second-largest population, Texas won going away. According to the Bureau of Economic Analysis (BEA), which just released its study of how all the states are performing economically, Texas came in first. California? 41st. In the first quarter of this year, the economy of the Lone Star State grew at an annual rate of 3.9 percent. Growth in the quarter in California was barely perceptible: 0.1 percent.

Activities in real estate, mining, and durable goods manufacturing explained the difference. The Texas economy, according to the BEA, was driven by the boom taking place in the mining sector as well as a large increase in manufacturing. On the other hand, California’s economy was dragged down by lackluster performance in arts, entertainment, recreation, retailing, agriculture, forestry, fishing, and hunting. The contributions to California’s economy by construction, mining, and durable goods manufacturing in the first quarter were minimal.

Amazon sellers are up in arms over a new returns policy that will make it easier for consumers to send back items at the merchant’s expense.

Marketplace sellers who ship products from their home, garage or warehouse — rather than using Amazon’s facilities — were told this week by email that starting Oct. 2, items they sell will be “automatically authorized” for return.

That means a buyer will no longer need to contact the seller before sending an item back, and the merchant won’t have the opportunity to communicate with the customer. If a consumer is returning an electronic device because it’s difficult to use, for example, the seller won’t be able to offer help before being forced to pay a refund.

“Customers will be able to print a prepaid return shipping label via the Online Return Center instantly,” the email said.

Additionally, Amazon said that it’s introducing “returnless refunds,” a feature that the company said is “highly requested by sellers.” The change enables sellers to offer a refund without taking back an item that may be expensive to ship and hard to resell.

A lot of people are overjoyed to cross the $100,000 threshold in annual income. And they should be — a six-figure salary is nothing to sneeze at.

But as income inequality in the US continues to worsen, a $100,000 salary creeps ever-closer to being an upper-middle-class income, not a sure sign of wealth.

In fact, according to a Business Insider analysis of US Census data, the $100,000 distinction isn’t enough to put anyone, at any age for which there is reliable data, in the top 1% of personal incomes.

Here is the full breakdown.

Business Insider analyzed data from the 2015 American Community Survey, an annual survey by the US Census Bureau that talks to 1% of all US households about various economic, social, and housing demographics.

Fast-food giant McDonald’s plans to accelerate its expansion in China increasing the number of restaurants in the country by 2,000 by the end of 2022, to a total of 4,500 nationwide.

The chain hopes the mass openings will drive double-digit sales growth in China in each of the next five years said Steve Easterbrook, its president and chief executive.

The new plans come after McDonald’s sold off most of the China business to state-owned investment house Citic and global asset manager Carlyle, saying they would bring a better understanding of the local market.

Under that US$2.08 billion deal, announced earlier this year, McDonald’s still holds a 20 per cent stake in the business. Citic Ltd and Citic Capital Partners will jointly take a 52 per cent stake, while US firm Carlyle will hold 28 per cent.

The opening pace of new McDonald’s restaurants in mainland China is expected to progressively ramp up from around 250 per year in 2017 to 500 per year in 2022, from 2,500 to 4,500 restaurants in total, including delivery services offered from over 75 per cent of those.

The most significant growth will be in third- and fourth-tier cities, which will by then account for around 45 per cent of its outlets in China.

The expansion plan also includes an increase in its so-called ‘Experience of the Future’ restaurants to over 90 per cent, which Easterbrook said will allow the company to offer digitalised and personalised dining experience to more customers.

Many of us welcomed Trump to the Presidency with a sense of pride. However, there is one group for whom the new (ish) president has brought some bad news – gun store owners, and gun manufacturers.

This is because gun sales have seen a significant drop since the election of Trump. But don’t worry – this does not indicate waning enthusiasm for people to own guns. Quite the opposite. It appears that demand has dropped because people feel that their rights to own guns will be protected under the new administration.

The extent to which this is true remains to be seen. While Trump seemed to be pro-gun during the election campaign, and though his campaign eventually won the backing of the NRA, it is not clear that there is a concrete policy position on gun rights. Like a lot of issues raised by the new administration, Trump’s stance on gun rights is frustratingly vague and lacking in details.

Of course, doing nothing to further erode our Second Amendment rights would be a welcome change from the Obama regime. The constant attempt to ban and / or limit ownership of assault-style weapons, though ultimately defeated, was a source of worry for people don’t want their rights to be further limited, or who rely on these guns for their livelihood.

Sales of these weapons peaked, therefore, during the Obama presidency, and specifically during those periods where the president was talking about banning them. There is, of course, a deep irony in this – that a president who was perhaps more anti-gun than any other in our recent history managed to create a huge demand for guns.

Now the Republicans are back, it seems that people are taking it more slowly when it comes to buying weapons. Instead of rushing to purchase a gun before it is banned, people now seem to be taking their time, secure in the knowledge that they have at least 5 years to get the gun that they want.

Two years ago, the president of the Seattle City Council offered a rather ludicrous proposition. He wanted Seattle to place a new tax on the sale of firearms and ammunition within the city limits. Ammo would cost an additional 2-5 cents per round, and a firearm would cost an extra $25. But what was even more absurd than the tax itself, is what the money would be going toward. The tax was supposed to pay for gun violence prevention programs and research.

The way City Council President Tim Burgess explained it, this “gun violence” tax would help offset the costs the city pays to treat gunshot victims. Essentially, it was a tax levied on responsible law abiding gun owners, to pay for the actions of violent criminals.

Despite how utterly stupid that sounds, the proposal passed. However, it didn’t have the desired effect. To the surprise of no one who actually understands the relationship between private firearm ownership and crime rates, the violent crime rate in Seattle has dramatically increased since the tax was put in place. It also brought in only a small fraction of the revenue that the city council was expecting. In short, the tax was a total failure.

So it’s no surprise that the tax has faced a lawsuit over the fact that Washington has a law that prevents municipalities from regulating firearms. Unfortunately, the Washington Supreme Court recently ruled against the lawsuit on the grounds that taxes aren’t the same as regulations, and cities are well within their right to levy sales taxes.

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Regardless of whether the court’s decision was right or wrong, it certainly sets a dangerous precedent. As an article from Breitbart recently pointed out, it opens a new avenue for gun control activists to hamper the Second Amendment.

On August 10 Washington’s high court sided with the City of Seattle, which adopted a “gun violence tax” in a strategy to slither around the state preemption law that placed exclusive authority for regulating firearms in the hands of the State Legislature. And this new scheme could be coming to any city that has an anti-gun rights Mayor and City Council.

In Seattle’s case, the tax is $25 on the sale of each firearm, plus two to five cents for each round of ammunition sold. This threat takes on even more sinister dimensions when one considers the potential for cities to simply up the fee. Seattle started with $25 per gun, but what if they want to raise that to $100, $500 or even $1,000?

MB 360–Is a college degree worth it?  Since the debt bubble burst spectacularly in 2007 many more prospective students are questioning the worth of a college degree.  For so many decades it was simply taken at face value that getting a college degree, any college degree would be worth it.  Slowly this perception has morphed when annual tuition is running at $20,000 or more at for-profit institutions and $50,000 for private institutions.  More to the point, most of the recent educational growth has been financed with large wallet crushing student loans.  This financing of the college dream is turning out story after gut-wrenching story of college education nightmares.  When a college education becomes this expensive it is important that potential students become savvy consumers.  The financial sector certainly isn’t going to offer any advice on navigating the minefield of higher education since they largely have their greedy hands on this sector of the economy as well.

The soaring cost of college

In hindsight everyone seems to now agree that the housing bubble was rather obvious to spot since it far outstripped every measure of inflation and even rose while incomes fell.  You would think this lesson would be learned but the cost of a college education is much deeper into bubble territory even beyond the metrics of the housing market at its peak:

While housing at the peak rose by a factor of 4 (400 on the chart) college tuition has soared by a factor of 10 (it hasn’t stopped going up so it is now likely up in the 11x or 12x range).  It is a downright startling figure especially when the incomes of recent college graduates has gone in the complete opposite direction:

Source:  BusinessWeek

Since 2000 real earnings for college graduates has fallen while tuition costs continue to soar and put students into further student loan debt.  I was hearing a few stories about states with record applicants to public universities yet with state budgets hurting, these schools are unable to meet the demand.  So students are left with the option of $50,000 a year for private institutions or going to for-profits that are a step above paper mills.  For this reason we have seen a giant increase in for-profit enrollments:

Source:  Senator Harkin

For-profits have tripled their growth since 2000 which I also believe has diluted the earnings potential of the overall college pool and has also saddled many students with incredible amounts of debt.  We are set to surpass the $1 trillion mark in student debt in 2012.  The recent recovery has been a low-wage employment recovery so many recent graduates are coming out with heavy debt burdens and finding employment opportunities that pay much less:

Source:  NLEP

We have lost a stunning 5,000,000+ mid-wage to high-wage jobs and have only added 1,000,000 since the recovery started way back in the summer of 2009.  Yet the pool of graduates continues to grow.  Another startling fact is many state schools are seeing peek applications even though high school graduation trends show a smaller cohort.  Why?  You have many people going back to school trying to retool especially after losing a job.  Yet going to a for-profit school for gaming, art, or some other career path may prove to be a very expensive realization that not all college degrees are created equal.  In many instances students would be better set if they went to a 2-year college or a trade school to pick-up the education they require.

“The difference of course is that state schools do not market to you.  You have to go to them.  The for-profits spend more money on marketing than they do on instruction.  That should tell you where their priorities sit.”

Most of the for-profits are owned by large financial institutions that had their hand in this economic meltdown we are living through:

So a lot of the dilution in educational quality has come at the hands of these institutions.  However, you also have private institutions outside of the top-tier that are heavily marketing and recruiting to pull students into their expensive four year traps.  There are a few rules you should follow if you are not sure how much debt you should take on when pursuing a college education:

-First, your maximum student loan debt should not pass your expected annual salary after college.

-Second, you should do your own market analysis of the field you are going into.  Many of these schools promise unrealistic placement data.

-Third, if unsure, look at 2-year state schools and transferring to a state 4-year institution.  Because of budget constraints and the above factors, state schools have gotten more competitive because people realize the other options are either too expensive or simply not worth it.

-Finally, If you really want to go to a private institution, consider a state school first and transferring into a graduate degree later.

The net worth gap between younger and older Americans is already large enough and doesn’t need to be bigger with the saddling of student debt:

Source:  CNN Money

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To expect a 17 or 18 year old to understand this is hard to see but parents need to step it up but with the average per worker salary being $25,000 it is doubtful many parents have the resources to run an in-depth market analysis when it comes to choosing the right school or program.  As usual do your own due diligence and don’t be fooled by the notion that all colleges are created equal and that college is priceless.  At these cost levels, you better believe that there is a significant price.

New home sales in the U.S. unexpectedly saw a substantial decrease in the month of July, according to a report released by the Commerce Department on Wednesday.

The report said new home sales plunged by 9.4 percent to an annual rate of 571,000 in July from the revised June rate of 630,000.

The steep drop surprised economists, who had expected new home sales to inch up to a rate of 612,000 from the 610,000 originally reported for the previous month.

The unexpected decline in new home sales was partly due to weakness in the Northeast and West, where sales plummeted by 23.8 percent and 21.3 percent, respectively.

New home sales in the South also fell by 4.1 percent during the month, while new home sales in the Midwest climbed by 6.2 percent.

Meanwhile, the report said the median sales price of new houses sold in July was $313,700, up 0.7 percent from $311,600 in June and up 6.3 percent from $295,000 a year ago.

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The Commerce Department also said there were an estimated 276,000 new houses for sale at the end of July compared to 272,000 at the end of the previous month.

CB–Three-quarters of Americans (75 percent) are living paycheck-to-paycheck to make ends meet, according to a survey from CareerBuilder. Thirty-eight percent of employees said they sometimes live paycheck-to-paycheck, 15 percent said they usually do and 23 percent said they always do. While making ends meet is a struggle for many post-recession, those with minimum wage jobs continue to be hit the hardest. Of workers who currently have a minimum wage job or have held one in the past, 66 percent said they couldn’t make ends meet and 50 percent said they had to work more than one job to make it work.

More than 3,200 full-time workers and more than 2,100 full-time hiring and human resource managers in the private sector across industries participated in the nationwide survey, conducted online by Harris Poll on behalf of CareerBuilder from May 11 to June 7, 2016.

INFOGRAPHIC: https://cb.com/MinWageGraphic

It’s not just minimum wage workers who are struggling. Nineteen percent of workers at all salary levels were not able to make ends meet every month during the past year, and while the likelihood of living paycheck-to-paycheck naturally decreases for workers with higher salaries, it’s affecting all salary ranges. Nine percent of workers making $100,000 or more feel they usually or always live paycheck-to-paycheck. Twenty-three percent of workers making $50,000-$99,999, and 51 percent of those making less than $50,000 feel they usually or always do to make ends meet.

Further, 68 percent of all workers say they’re in debt, and while 46 percent say it’s manageable, it should be noted that 16 percent of all workers have reduced their 401k contribution and/or personal savings in the last year, more than a third (36 percent) do not participate in a 401k plan, IRA or comparable retirement plan, and 25 percent have not set aside any savings each month in the last year.

While the majority of employees (66 percent) say they feel more fiscally responsible since the recession, many still feel defeated. Of employees in debt, the majority (55 percent) feel they will always be in debt and site having these debts:

• • • Credit card: 64 percent
    • Auto loan: 47 percent
    • Mortgage: 45 percent
    • Student loan: 31 percent
    • Loans from friends or family: 10 percent
    • Tax debt: 8 percent
    • Other: 14 percent

Employers Take a Stance

This year employers think minimum wage should be raised more than ever before. Only 5 percent of all employers believe the federal minimum wage ($7.25 per hour) is fair. The majority (67 percent) feel a fair minimum wage is $10 or more per hour, up from 61 percent last year; and 15 percent say a fair minimum wage is $15 or more per hour, up from 11 percent last year. Sixty-four percent of employers believe minimum wage should be increased in their state, up from 62 percent in 2014.

“Fair wages and benefits such as paid sick days are a hot political topic right now, and they’re also on employers’ minds as the public and private sector continue to work to provide good jobs, which will lead to a stronger, more stable workforce, leading ultimately to a healthier economy,” said Rosemary Haefner, chief human resources officer for CareerBuilder.

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Thirty percent of employers plan to hire minimum wage workers this year, up from 26 percent last year. Although 67 percent of employers feel a fair minimum wage is $10 or more per hour, of those hiring minimum wage workers this year, almost half (48 percent) said they’re going to pay less than $10. Here’s a breakdown of what employees plan on paying minimum wage workers this year:

• • • Less than $8:00: 11 percent
    • $8.00-$8.99 per hour: 23 percent
    • $9.00-$9.99 per hour: 14 percent
    • $10.00-$10.99 per hour: 21 percent
    • $11.00-$11.99 per hour: 7 percent
    • $12.00-$12.99 per hour: 8 percent
    • $13.00-$13.99 per hour: 6 percent
    • $14.00-$14.99 per hour: 5 percent
    • $15.00 or more per hour: 6 percent

When asked why they think the minimum wage in their state should be increased, employers who agreed with the sentiment most often said because it can improve standard of living (72 percent) followed by because it can have a positive effect on employee retention (59 percent) and because it can help bolster the economy (53 percent). Those who do not think minimum wage should be increased in their state said they believe this because it can potentially cause employers to hire less people (67 percent), because it can cause issues for small businesses who are struggling to get by (66 percent) and because it can cause hikes in prices to offset labor costs (65 percent).

Survey Methodology

The nationwide survey was conducted online within the U.S. by Harris Poll on behalf of CareerBuilder among 2,153 hiring and human resource managers ages 18 and over (employed full-time, not self-employed, non-government) and 3,244 employees ages 18 and over (employed full-time, not self-employed, non-government) between May 11 and June 7, 2016 (percentages for some questions are based on a subset, based on their responses to certain questions). With pure probability samples of 2,153 and 3,244, one could say with a 95 percent probability that the overall results have sampling errors of +/- 2.11 and +/- 1.72 percentage points, respectively. Sampling error for data from sub-samples is higher and varies.

MISH TALK–A Chinese T-shirt company is setting up shop in Arkansas, lured by U.S. sewbots and lower production costs. It will cost about 33 cents to produce a shirt.

Please consider China Snaps Up America’s Cheap Robot Labor.

“Made in America” will soon grace the labels of T-shirts produced by a Chinese company in Little Rock.

By early 2018, Tianyuan Garments Co., based in the Suzhou Industrial Park in eastern China, will unveil a $20 million factory staffed by about 330 robots from Atlanta-based Softwear Automation Inc. The botmaker and garment company estimate the factory will stitch about 23 million T-shirts a year. The cost per shirt, according to Pete Santora, Softwear’s chief commercial officer: 33¢.

“Around the world, even the cheapest labor market can’t compete with us,” Tang Xinhong, the chairman of Tianyuan, told the China Daily about the factory in July. The company, one of the biggest apparel makers in China, supplies Adidas, Armani, Reebok, and other major brands.

The garment industry has been slower to automate than others, such as automobiles and electronics. Developing a robot that can match the dexterity of a human hand to manipulate and stitch fabric is an expensive proposition, Santora says. Stitching a dress shirt with a breast pocket requires about 78 separate steps. Tricky, but such a bot is coming, says the chief executive officer of Softwear Automation, Palaniswamy Rajan: “We will roll that out within the next five years.”

Still, many garment makers are reluctant to move away from China. Over the past two decades, the industry has built up an extensive supply network for yarns, dyes, fasteners, zippers, and trimmings. China is still the world’s largest exporter of garments, with an annual value of $170 billion, says Xu of the apparel council.

One T-shirt factory isn’t going to change that. But after tariffs, duties, and shipping costs are factored in, the case for shifting production to the U.S. from emerging markets is a compelling one, Santora says. Meanwhile, as robots become smarter and market access becomes more important, poorer nations that counted on manufacturing to climb out of poverty—as Japan, Korea, and China did in the decades after World War II—will have to offer more than cheap labor.

The goal is to produce 23 million t-shirts at 33 cents each, about one shirt every 26 seconds.

It’s rather difficult to compete against 33 cents when shipping and transportation costs are rolled in.

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The factory will create 400 human jobs.

Deflationary productivity increases are just around the corner in manufacturing and driverless transportation. The Fed will not like them when they happen.

As the Hurricane Harvey storm system dissipates and the water it dropped recedes, Houstonians left without shelter face the daunting task of rebuilding their lives. Many people are focused on the staggering figure of 40,000 homes lost, but another number also deserves close scrutiny: The flooding destroyed as many as a million cars in the Houston metro area.

Reliable transportation is a daily, fundamental need, almost more so in the wake of a disaster. Add in the fact that Houston is a car-dependent city, and the consequences of the destruction of so many vehicles comes into stark focus. How will rental companies and dealerships suddenly supply cars to people who need them right now? How do people get permanent cars? And what is the fate for the many people who can’t afford to replace their way of getting around?

WOLF STREET–On August 24, as hurricane Harvey was barreling into one of the largest urban areas in the US, Kelley Blue Book forecast unperturbed that new-vehicle sales would rise 1.5% year-over-year in the US to a total of 1.53 million units, based largely on the fact that August had one more selling day than a year ago.

“August should be the first year-over-year increase of 2017,” it said bravely.

It wasn’t rose-colored optimism though. The Seasonally Adjusted Annual Rate (SAAR), which accounts for that extra selling day, would fall 3% year-over-year to 16.6 million units, it said.

But it was the eighth month in a row that forecasters were woefully unprepared for reality – though there was finally some good news from GM.

What we got…

• Total new-vehicle sales declined 1.9% year-over-year to 1.483 million light vehicles, according to Autodata. This is the number of vehicles sold and delivered by dealers to their customers, or delivered by automakers directly to large fleet customers.
• Despite that extra selling day, it was the eighth month in a row of year-over-year declines.
• Year-to-date, total new-vehicle sales are down 2.7%.
• Car sales dropped 8.5% to 549,749 vehicles. They’re down 11.3% year-to-date.
• Truck sales – which include pickups, SUVs, compact SUVs, and vans – had been booming as Americans are shifting from cars to trucks, particularly to compact SUVs (“crossovers”). Trucks accounted for 63% of total retail sales. But that boom too has slowed down this year. In August truck sales inched up 2.4% — not even enough to account for that extra selling day — to 933,581.
• SAAR, which takes that extra selling day into account, dropped 6.4% year-over-year to 16.1 million.

General Motors digs out of its hole.

GM’s car sales still plunged in August, but truck sales roared back to life, thanks to a slew of new SUV and compact SUV models that started taking off. Total sales jumped 7.4% year-over-year to 275,326. Year-to-date, total sales are still down 2.4%.

• Trucks sales soared 16.5% year-over-year to 206,698 units, and are up 4.7% year-do-date.
• Car sales, which had been in collapse mode (down 19.3% year-to-date) dropped 13.2% in August, to 68,628 vehicles.
• By brand: Chevrolet +11.4% (96,007 units); GMC +12% (47,718 units); but Buick, which is almost dead in the US -23% (6,811 units); and Cadillac -8% (15,016 units).
• Inventory on dealer lots dropped to 88 days’ supply, from 104 days at the end of July. That’s still well above 60 days’ supply that is considered the upper limit of healthy, but it’s a huge move in the right direction.

Ford got hit by plunging SUV sales.

Total sales fell 2.1% to 209,029 vehicles and are down 4.0% year to date. By brand: Ford -2.2% (201,189 units) and Lincoln -5.8% (8,708 units).

• Car sales dropped 8.6% to 47,652 vehicles and are down 18.9% this year.
• Truck sales edged up 0.1% to 161,377 units and are up 1.9% for the year. F-series are doing well, up 9% to 96,619 units. But the hot segment of SUVs is cratering, which should be a nerve-wrecking experience for Ford. SUV sales fell 11% to 65,626 units!
• Ford ended the month with 67 days’ supply on dealer lots, up from 66 days in July.

Fiat-Chrysler loses it.

FCA US total sales dropped 10.6% to 176,033 and are down 7.7% for the year so far – going from bad to worse.

• Car sales plunged 15.9% to 23,723 and are down 22.4% year-to-date. At this pace, FCA will soon give up on selling cars. None of its cars are made in the US anymore. And not even the Chinese automakers are interested in acquiring the car lines. All they want, if anything, is Jeep. Of FCA’s total sales in the US, cars account for only 13.4%.
• But even truck sales plunged 9.7% to 152,310 and are down 4.9% for the year.

3 winners, 5 losers among other major automakers.

Toyota total sales rose 6.8% to 227,625 units, but remained down 1.3% for the year. It was once again the second largest auto seller in the US overall, behind GM and ahead of Ford.

• Car sales dropped 7.2% to 92,912. But that’s nearly twice as many cars as Ford sold and 35% more than GM sold.
• Truck sales soared 19.2% to 134,713 and are a up 9.3% for the year. At this pace, they may soon catch up with Ford truck sales.

Honda total sales declined 2.4% for the month to 146,015 and are down -0.5% for the year.

• Car sales rose 2.6% to 75,354 but are down 4.3% for the year. Honda is the second largest car seller in the US, behind only Toyota.
• Truck sales dropped 7.2% for the month to 70,661 but are up 3.5% for the year.

Nissan total sales plunged 13.1% for the month to 108,326, but are still up 0.1% for the year.

• Car sales collapsed 18.8% to 46,900 and are down 12.3% year-to-date.
• Truck sales dropped 8.1% to 61,462 but are up 14.7% year-to-date. This is a dizzying turn from July, when truck sales had been up 18.3%.

Subaru total sales rose 4.6% to 63,215, up 8.1% year-to-date. Car sales rose 9.0% to 34,864 and truck sales edged down to 28,351. Note that Subaru car sales are up 11% for the year: not every automaker suffers from plunging car sales!

Hyundai Motor Group, oh dearie! The conglomerate includes Hyundai and Kia. Kia was barely hanging on, with a sales decline of less than industry average. But Hyundai sales are still in collapse mode.

• Hyundai total sales plummeted 24.6% to 54,310, by far the steepest crash of the major automakers. Year-to-date, sales are down 12.7%. Car sales collapsed 32.8% to just 33,079. Truck sales fell 6.8% to 21,231 units.
• Kia total sales edged down 1.7% to 53,323 units, and are down 8.4% so far this year. Car sales rose 9.2% to 36,762, but truck sales plunged 19.5% to 16,561 and are down 18.9% year-to-date, in truck-focused America.

Volkswagen Group sales rose 6.1% to 52,112. This includes Audi, Volkswagen, Bentley, and Lamborghini. Year-to-date, sales are up 6%.

Daimler sales dropped 8.5% to 29,183 and are down 3.1% year-to-date.

BMW sales dropped 8.0% to 28,115 and were down 5.7% year-to-date. This includes BMW, Mini, and Rolls Royce. Rolls sales were up 73% to 114 cars. BMW was down 7.7% and Mini plunged 10.5%.

Here’s a curious tidbit about prices.

According to KBB’s estimates, incentives by automakers averaged over 10% of transaction prices and, as it said, “are helping support retail growth” – though the word “growth” may be the wrong term. But they do keep retail sales from falling faster.

Despite those huge incentives, the estimated average transaction price for light vehicles in August, at $34,648,  was up $243 or 0.7% from a year ago!This is the result of two factors: buyers shifting from cheaper cars to more expensive SUVs, and automakers slapping higher sticker prices on their vehicles.

And the impact of Hurricane Harvey on auto sales?

New-vehicle sales in the affected areas dropped essentially to zero for the last week in August. Given the size of the area, Harvey had a noticeable impact on national auto sales. But the fact that some automakers – particularly GM, Toyota, and Subaru – kicked butt while others got crushed shows that the overall sales decline wasn’t just Harvey’s fault, though it contributed to it.

For the first two weeks in September, sales in the area will remain at essentially zero before recovery begins. Eventually, the devastation will create hot demand for trucks and SUVs, and this will pose its own challenges. Here are my thoughts on how this might turn out. Read…  What will Harvey do to “Carmageddon?”

WOLF STREET–Brick-and-mortar retail meltdown strikes again – this time, Toys R Us. In what is a classic sign, the company has hired mega law firm Kirkland & Ellis, whose bankruptcy-and-restructuring practice is considered a leader in the now booming bankruptcy-and-restructuring industry.

Toys R Us, with 1,694 stores globally, has $5.2 billion in long-term debt, according to its latest quarterly report, and sports a negative equity of $1.3 billion. Quarterly sales declined 4.8% year-over-year, to $2.2 billion. This isn’t a one-quarter dip: sales are down 15% from the same quarter in 2012. And the net loss jumped 30% year-over-year to $164 million.

The company needs to restructure its debts, particularly $400 million that is coming due in 2018, and a bankruptcy filing is one of the options, “sources familiar with the situation” told CNBC on Wednesday.

The company, long teetering under its massive pile of debt, has been trying to refinance its capital structure. In early 2016, it disclosed that it was working with the biggest investment banks on Wall Street – BofA Merrill Lynch, Goldman Sachs, and Lazard – to do so. Last year, it was able to refinance some of its debt, but that wasn’t enough. Now lenders are shying away from overleveraged brick-and-mortar retailers, given the ongoing meltdown of overleveraged brick-and-mortar retailers, particularly those owned by private equity firms and hedge funds.

In response to CNBC’s questions, a Toys R Us spokeswoman responded with corporate blah-blah-blah:

“As we previously discussed on our first quarter earnings call, Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing.”

“We expect to provide an update about these activities, as well as the many initiatives underway to provide an outstanding customer experience in our global retail locations and webstore during the holiday season, during our second quarter earnings call” [on September 26].

As in so many cases in the brick-and-mortar retail meltdown, there is a private-equity angle to it. PE firms Kohlberg Kravis Roberts (KKR), Vornado Realty Trust, and Bain Capital Partners acquired the publicly traded shares of Toys R Us in a leveraged buyout during the LBO boom in 2005 in a deal valued at $6.6 billion. They funded the acquisition in large part by loading up the company with debt — hence “leveraged buyout.”

Even at the time, the toy retailer was struggling with competition from Walmart, online retailers, and brick-and-mortar toy stores. Competition is a good thing, but not if the company has too much debt.

So here’s what the three PE firms did to Toys R Us: they stripped out cash and loaded the company up with debt. And these are the results: At the end of its fiscal year 2004, the last full year before the buyout, Toys R Us had $2.2 billion in cash, cash equivalents, and short-term investments. By Q1 2017, this had collapsed to just $301 million. Over the same period, long-term debt has surged 126%, from $2.3 billion to $5.2 billion.

This table shows the astounding results of asset stripping and overleveraging. It takes a lot of expertise and Wall Street connivance to pull this off. So whatever happens to Toys R Us, the PE firms already extracted their wild profits:

Over the same period (2004 through 2016), annual revenues have remained essentially flat at just over $11 billion.

Bain Capital is also the PE firm behind the 2010 leveraged buyout of children’s clothing retailer Gymboree with 1,281 stores, which filed for bankruptcy in June.

After extracting enough cash from Toys R Us and loading it up with a debilitating pile of debt, the three PE firms tried to unload it to the unsuspecting public in an IPO in 2010. They were hoping for an additional payday, the icing on the cake, so to speak. But they had to scuttle their efforts due to “challenging market conditions.”

Yet toy industry sales have been “robust,” growing by 5% in 2016, and by a compound annual rate of 5% since 2013.

Incapably managed by the PE firms, Toys R Us has been losing market share in its struggle with online retailers, particularly Amazon, and with Walmart at every level, and with other toy stores. Nevertheless, if the company weren’t overleveraged and didn’t have PE firms leeching off it, its slowly declining revenues and thinning profits turning to losses wouldn’t be the end of the world.

But once PE firms sink their teeth into a company, there is no margin for error. And once lenders and bondholders finally get skittish – often the same whose connivance made the LBO and the asset stripping possible – then the whole house of cards, so to speak, comes tumbling down.

This baby is going down the tubes at an ever faster speed. Read…  Sears Revenues to Hit Zero in 3 Years. But Bankruptcy First

ZERO HEDGE–With credit card data in for Q2 2017, American households look to once again be on a collision course with the ever-elusive $1 trillion goal that narrowly escaped their clutches in 2008.  With nearly $940 billion in credit card debt outstanding, 2Q 2017 marked the second highest consumer revolving debt balance since the previous peak in 2008.  Per WalletHub:

All of which adds up to nearly $8,000 of credit card debt per household, up 5% YoY versus flat-ish wages.

Of course, the more surprising component of the 2Q 2017 credit card data is not that banks continue to trip over one another for the ‘opportunity’ to underwrite Americans’ purchases of fidget spinners, but rather that they continue to do so despite the rather ominous recent rise in charge-offs.

Not surprisingly, Morgan Stanley recently noted the same trend in subprime credit card delinquencies…which they apparently found staggering in light of the fact that ‘everything is awesome’ in the job market.

Of course, after spending the entire month of August analyzing those seemingly contradictory facts, Morgan Stanley came to many of the same conclusions that we note a regular, recurring basis.  Apparently, soaring credit card delinquencies have something to do with stagnant wages in the face of soaring healthcare costs and rising rents…who could have guessed that?

Investors ask, “Why are card losses rising if employment is  so good?” Our deep dive & quant work shows subprime is stretched from higher rent, healthcare costs & low  wage growth, with lower credit availability a coming drag.

A Tale of Two Consumers, with the subprime consumer increasingly at risk, driving up net charge-offs (NCO) and lowering EPS: The economy is solid and unemployment is very low, but credit card delinquencies have been increasing… so we spent the month of August delving into what is really  going on with the US consumer.   We found that the average consumer is in good shape but the financial pressures on subprime consumers are high and, critically, rising

1. Banks are  pulling back on subprime card loan growth. For the past 3 years, bank lending to subprime card posted an 8% CAGR, faster than prime’s 5% growth.   But banks are now beginning to put on the brakes.  Subprime loan growth has slowed over the past two quarters to 10% y/y in 2Q17, down from 13% y/y peak in 4Q16.    Our quant work shows a negative correlation between change in loan growth and change in losses.  Result? Expect declining subprime loan growth to drive up subprime losses over the next 12 months.

2. Rent and healthcare costs a bigger burden for lower income consumers… and rising.  Consumers in the lowest income quintile spend 38% of after-tax income on rent and another 18% on healthcare costs, a combined 56%.  This is well above the average consumer’s  40%.  Pressures are building on both.  Our REIT colleagues expect rental rates on mid- to low income apartments, Classes B & C,  will continue to rise from already high levels, but at a decelerating pace.  Our healthcare colleagues expect healthcare costs to rise ~5% annually over the next few years.   These costs put more pressure on lower income consumers, who have lower wage growth.

3. Discretionary income not keeping up with debt service burden growth.  Debt service burden (interest and principal repayment) is growing 2%, faster than the 1% growth in discretionary income for the average consumer. That means, after paying for basic needs like  shelter, food, healthcare, and utilities, there is less left over to pay back lenders. Middle income renters are in the toughest spot as  it looks like their borrowing has accelerated in auto, student, and personal loans, while their  disposable income growth has been below average.  The lowest income quintile is burdened by high and rising rent and healthcare costs.

Ironically, after declining for decades, Morgan Stanley presents the following chart which reveals that healthcare costs as a percent of disposable income started consistently rising again only after the passage of Obamacare.  Meanwhile, soaring apartment rents are also wreaking havoc on disposable income for middle-class families.

Meanwhile, despite a “strong job market”, debt payments can only continue to grow at a faster rate than income for so long before it starts to take a toll on overall credit performance.

Alas, all things that Yellen & Co. can cure with some more rate hikes…

According to eMarketer, digital video consumption is on the rise leading to a seismic shift in the industry.

Traditional TV viewers are expected to shrink nearly 10% by 2021 with the expectation of a sharp decrease of total media ad spending upwards of -30% reduction. Even in 2017, the trend is accelerating with eMarketer expecting a slowdown in ad spending, after 2016 benefited from the Olympics and U.S. presidential election.

As eMarketer explains, traditional TV advertising is slowing even more than expected as viewers cut cable and transition to digital video platforms. The estimates for ‘cord-cutters’ is expected to explode this year through 2021. The timeframe provided could explain cable-apocalypse is here. Per eMarketer,

In fact, by 2021, the number of cord-cutters will nearly equal the number of people who have never had pay TV (“cord-nevers”).

This year, there will be 22.2 million cord-cutters ages 18 and older, a figure up 33.2% over 2016. The overall tally is much higher than the 15.4 million eMarketer previously predicted. Meanwhile, the number of US adult cord-nevers will grow 5.8% this year to 34.4 million.

“Younger audiences continue to switch to either exclusively watching Over-The-Top video or watching them in combination with free TV options,” said Chris Bendtsen, senior forecasting analyst at eMarketer. “Last year, even the Olympics and presidential elections could not prevent younger audiences from abandoning pay TV.”