Strike begins at GM manufacturing plant in Canada

At 11:00 p.m. Sunday night, workers at General Motors’ CAMI  Assembly Plant in Ingersoll, Ontario, Canada left their posts and began picketing in front of the facility, Canadian news agency Global News reports.

The strike began after GM and Unifor Local 88, a Canadian labor union that represents 3,000 workers, including those at the CAMI facility, failed to reach an agreement by the 10:59 p.m. deadline Sunday.

In August, 99.8 percent of the plant’s workers voted in favor of going on strike in such a scenario. The walkout is the first at a Canadian GM facility in more than 20 years, according to Global News.

Both GM and Unifor Local 88 expressed willingness to continue pursuing a workable arrangement.

“While General Motors of Canada and our Unifor partners have made very positive progress on several issues over the past weeks, the company is disappointed that we were not able to complete a new agreement. We encourage Unifor to resume negotiations and to continue working together to secure a competitive agreement,” the auto giant said in a statement.

Unifor Local 88 chair Mike Van Boekel told Global News the union, likewise, remains open to hearing proposals from GM. He said workers would resume working mid-week if the two parties could reach a “tentative agreement.” However, if GM fails to finalize such an agreement the following Sunday, Van Boekel says, the strike will continue.

The union is negotiating for higher wages, improved benefits, and a commitment by GM to keep production of the Chevy Equinox at the CAMI plant. The facility formerly produced Terrain as well as Equinox vehicles, but in January, GM moved production of the Terrain to Mexico.

“We build [built] the Terrain and the Equinox. The Terrain left, they moved it to Mexico. We were number one in every area for quality, the sales are huge, our profits for the company are huge, and they moved the truck to Mexico anyway,” said Van Boekel, per Global News.

The union wants reassurance that the automaker will not similarly outsource Equinox production.

“If we don’t have a product we can yell all we want, but if the plants are empty, there’s nothing to gain. So we are looking for product, we are looking for commitment, we are looking for investment. Before money, before language, we have to guarantee our jobs are there and that we can support our families,” said Van Boekel.

The product the CAMI plant currently has—the Chevy Equinox—is increasingly vital to GM’s success. As sales of new vehicles decline in the U.S. and around the world, SUVs and crossovers—the Equinox belongs to the latter category—remain in high demand.

Sales of the Equinox are soaring accordingly. Following the release of an updated 2018 Equinox model earlier this year, sales of the vehicle rose 67 percent year-over-year in August.

GM employs more than 2,700 people at the CAMI plant, which opened in 1989 as part of a joint venture between the American automaker and Suzuki Motor Corporation. The two companies split ownership of the facility until 2011 when GM acquired full ownership.

Over the years, the plant has produced seven different General Motors vehicles. The Equinox, which the plant has produced since 2009, and the Terrain, which the plant produced from 2009 until early 2017, are the best-selling vehicles ever to be manufactured there.

Ingersol’s CAMI plant is one of three GM manufacturing facilities in Canada. Oshawa Assembly, located roughly 200 km (125 miles) northeast of Ingersoll, has been operational since 1953. It currently employs over 2,600 people. Like the Ingersoll facility, the one in Oshawa exclusively produces the Equinox.

Van Boekel told Global News the union wants CAMI “to be at least the lead producer of the Equinox.”

A third GM manufacturing facility employs 1,500 people. The propulsion plant in Saint Catherines builds engines and other components.

In addition to the manufacturing operations, GM has an auxiliary headquarters in Oshawa (the company’s primary headquarters are in Detroit) and numerous technology centers throughout Canada. The company’s Canadian operations as a whole employ about 9,000. 225,000 people work for the company worldwide.

As of 2:15 p.m. EST, GM’s stock has dipped 0.66 percent in Monday trading.

Featured image via Wikimedia Commons

Boeing wins $600 million deal to design the next Air Force One

The U.S. Air Force announced Wednesday that on Tuesday it awarded Boeing a $600 million contract to design two new aircraft for the President’s Air Force One fleet. Both planes will be 747-8 models; they will replace a pair of aging VC-25A (747-200B) aircraft. President Obama ordered the replacement during his second term, according to LiveScience.com.

The Air Force expects the new planes to be operational by 2024.

The VC-25As have been in use since 1990, and have carried five different presidents.

The Air Force agreed to purchase the replacement planes from Boeing in early August. The la Times quotes a Boeing spokeswoman as saying at the time that the company sold the planes to the Air Force “at a substantial discount from the company’s existing inventory.”

“Following the award of the contract to purchase two commercial 747-8 aircraft, this [i.e. Tuesday’s] contract award is the next major step forward toward ensuring an overall affordable program,” said Maj. Gen. Duke Richardson, Presidential Airlift Recapitalization program executive officer.

Under the contract, Boeing will “complete the initial design of the future Air Force One,” according to the Air Force’s statement.” The design will need to meet “presidential airlift mission requirements,” and the cost of the contract cannot exceed a ceiling President Trump will define.

According to the Times, Trump said via Twitter in December that the then-$4-billion budget for the design and implementation of the new Air Force One aircraft was “out of control.” In January, Defense Secretary James Mattis ordered a review of the Air Force One budget.

The Air Force has asked Boeing to incorporate the following elements into the design: “a mission communication system, electrical power upgrades, a medical facility, an executive interior, a self-defense system and autonomous ground operations capabilities.”

The current contract covers only the design of the Presidential planes. The Air Force says it is working with Boeing on a follow-up contract, which will govern additional design efforts, as well as the modification, testing and delivery of the aircraft. The military expects to award that contract in Summer 2018.

The 747-8 models feature numerous upgrades over the 747-200Bs the President uses now, Boeing says. The new planes boast a range of 7730 nautical miles (8895.53 miles), meaning they can fly from Washington D.C. to Hong Kong without refueling. The 747-200Bs had a range of 6735 nautical miles (7750.5 miles)—roughly the distance from D.C. to Tokyo.

The new planes also emit 16 tons less CO2 than the current models.

The current planes cruise at a speed of .84 Mach (644.5 mph)—the new ones do so at .855 Mach (656 mph). Mach One, the speed of sound, is 767.269 mph.

The new planes are six yards longer than their predecessors from head-to-tail and almost 29 feet longer in terms of wingspan.

They can support 987,000 pounds at takeoff; 154,000 (18.5 percent) more than their predecessors.

That last attribute is important given that today’s Air Force One includes a conference/dining room, two offices (one of which converts into a medical facility), and two galleys (kitchens) that can accommodate 100 guests.

The new Air Force One will be the seventh Boeing has designed since 1942.

The company routinely partners with the U.S. military to develop weapons and other defense implements. In late August, the Air Force announced that it had awarded Boeing, as well as Northrop Grumman, contracts to design new, land-based, nuclear ICBMs. The Air Force will likely choose the better of the two designs, or take elements from both.

Boeing’s defense operations represent a significant portion of its revenue. In 2016, the company generated over $12.5 billion through the sale of military aircraft. In 2015, the figure was $13.4 billion.

By comparison, Boeing generated over $65 billion through the sale of commercial planes in 2016 and more than $66 billion a year earlier.

So, in 2016, 16 percent of the revenue Boeing generated through the sale of commercial and military aircraft came from sales of the latter. In 2015, that figure was marginally higher.

At the market’s close Thursday, Boeing stock was up more than 3 percent since Wednesday morning.

Featured image via Wikimedia Commons

High-tech retail startup Bodega raises $2.5 million in funding round

Bodega, a San Francisco-based startup that operates fully-automated kiosks roughly the size of vending machines, introduced itself to the world Wednesday. The company has raised $2.5 million in a funding round led by venture capital firms Homebrew and First Round Capital, TechCrunch reports.

Thirty Bodega kiosks (which the company calls “bodegas”) are already operational in apartment buildings, gyms and office buildings throughout the Bay Area. The company will presumably use the seed money to expand.

Bodega users create an account on the company’s smartphone app and input their credit card information. As a customer approaches a kiosk, he/she inputs a three-digit, kiosk-specific code via the app. The code unlocks the kiosk so the customer can reach in and grab what he/she needs.

Cameras track the movement of the customer’s hand to determine what he has picked out, and then automatically charge the customer’s credit card.

Though the eight-square-foot cabinets may sound like high-tech vending machines (essentially, they are), Bodega kiosks stock a wider and more customized range of products than traditional vending machines do. The particular items stocked at a given kiosk are tailored to the demands of the customers who use that kiosk. A Bodega in an apartment building, for instance, may offer everything from toothbrushes to Solo cups. A kiosk located in a gym might have health food, sportswear, etc.

Depending on its location, a kiosk will come stocked with a “base set of products” (TechCrunch’s words). As customers begin to buy things, the Bodega system tracks the purchases to gauge which products are in demand at a given kiosk, and surveys repeat customers to ask what they would like to see added. The company refines the offerings accordingly.

The kiosks bring “the relevant slice of a store” to within 100 feet of a customer, the company’s website says

“Retailers are contouring their business around this fact that users want convenience,” said Paul McDonald, a thirteen-year Google veteran who now runs the startup. “There’s really only been two options: you can go to the store, or you can order something online. What we’re trying to do is introduce a third option, a new way of buying things. Shrink the store, bring the best parts in a smaller form factor and bring it to where you are.”

Some have criticized the “Bodega” name and its implication that the company intends to compete with local corner stores like the bodegas in New York and Los Angeles, which are often centerpieces in their communities.

“Bodega” is a Spanish word meaning, more or less, “local shop.” McDonald says, per GQ.com, that his company surveyed the Latin American community as to whether the name was a misappropriation of the term, and 97 percent of respondents said “no.”

“But it’s clear that we may not have been asking the right questions of the right people,” McDonald admits. 

“Despite our best intentions and our admiration for traditional bodegas, we clearly hit a nerve this morning, we apologize. Rather than disrespect to traditional corner stores — or worse yet, a threat — we intended only admiration.”

McDonald said the company would review the criticism and consider changing the name.

Many are concerned Bodega, whatever it is called, will threaten traditional bodegas.  The company indicated Wednesday that it intends to offer the “same ease and convenience” the ubiquity of corner stores in places like New York City affords.

Bodega clarified that it does not intend to compete with tradition bodegas, which, McDonald says, stock more products than a Bodega kiosk ever could, and offer “integral human connection” between patrons and clerks. Rather than challenge established bodegas, the company says it wants to “bring commerce to places where commerce currently doesn’t exist.”

Still, it seems that, in the places where they do appear, the high-tech Bodegas might siphon a certain amount of business away from local shops. For instance, a person who generally goes to the local bodega when he/she needs milk at 2 a.m., might be inclined to get that milk at a Bodega kiosk were one available in his/her apartment building.

Bodega notes the grocery market is but one of many markets it is targeting. The company envisions itself a competitor more to huge chains like Wal-Mart than small, local shops.

“The market we’re going after is some combination of the grocery, gym market, and everyday essentials. Eventually, what we see is a world where you don’t have to go to the 30,000 square foot stores. Instead, we distribute the store based on products you buy once a week or month,” said McDonald.

The autonomy of Bodega kiosks may threaten retail jobs. “Retail in The U.S. is huge, 10% of Americans work in retail,” McDonald himself notes. “The folks who are retailers want technology to reduce their costs and bring products closer [to consumers].”

In reducing employers’ costs, one may infer, Bodega may take employees’ jobs.

But, McDonald says: “Rather than take away jobs, we hope Bodega will help create them. We see a future where anyone can own and operate a Bodega—delivering relevant items and a great retail experience to places no corner store would ever open.”

Featured image via http://observatoriodainternet.br

Bitcoin plummets as economists, regulators express skepticism of cryptocurrency boom

Bitcoin’s value, which nearly quintupled from the first of the year through the first of September, peaking at $4,950.72 per coin on the latter date, has fallen more than 20 percent this month and over 15 percent in the past seven days, as of 4:15 p.m. EST Wednesday.

The decline comes as a number of regulatory agencies and economic experts around the globe express skepticism regarding Bitcoin and other cryptocurrencies.

China banned Initial Coin Offerings (ICOs)—the means by which creators introduce and raise capital for new cryptocurrency projects—earlier this month, and Chinese news outlet Caixin reported Friday that the country might prohibit cryptocurrency exchanges entirely in the near future, Business Insider notes. 

But, Bloomberg’s Lulu Yilun Chen tweeted Friday that the Chinese government had yet to mandate the shutdown of Okcoin and Huobi PRs, two of the country’s most prominent cryptocurrency exchange platforms.

Some say China will relax the pressure it has placed on the cryptocurrency market once the government has found a viable means of regulating that market.

“China [is] saying, ok, we need to push back on these for now until we figure out how to deal with them,” said Zennon Kapron, director of the Shanghai-based financial technology consultancy Kapronasia, per Reuters, in reference to the country’s ICO ban. Kapron added that he expects the country’s government to eventually ease the ban.

Previous Chinese regulations against cryptocurrencies have proved temporary. The country prohibited the withdrawal of Bitcoin investments in February, but allowed withdrawals to resume in June, Business Insider points out.

Chinese regulators are not the only ones wary of the cryptocurrency boom.

Tuesday, the U.K.’s Financial Conduct Authority released a statement cautioning investors about the risks of ICO investors, Business Insider reports. These risks, according to the FCA, include the lack of regulation governing the cryptocurrency market, the volatility of cryptocurrencies, the potential for fraudulent ICOs, and the experimental nature of cryptocurrency projects.

“ICOs are very high-risk, speculative investments,” the FCA’s warning reads. “You should be conscious of the risks involved … and fully research the specific project if you are thinking about buying digital tokens. You should only invest in an ICO project if you are an experienced investor, confident in the quality of the ICO project itself (e.g., business plan, technology, people involved) and prepared to lose your entire stake.”

Also on Tuesday, Business Insider says, JP Morgan CEO Jamie Dimon predicted an imminent crash of what he sees as the Bitcoin bubble. His prediction, so far, has been self-fulfilling. Dimon said he “would fire any trader that transacted Bitcoin for being stupid” (Business Insider’s paraphrasing).

As of 5:15 p.m. EST, Bitcoin’s value has fallen six percent on Tuesday’s news.

Business Insider notes that early this month, in an interview with Quartz, Yale economics professor and Nobel Prize winning author Robert Shiller, who predicted the crash of the housing and technology markets in his 2000 book “Irrational Exuberance,” called Bitcoin the best example in today’s market of a speculative bubble.

A “speculative bubble” occurs when unrealistic expectations amongst investors of an asset’s future performance drive the market value of that asset beyond any real gains it is capable of accruing.

In the aforementioned book, Shiller argues that the tech bubble formed because “a fundamental deep angst of our digitization and computers” compelled investors to seek a false sense of understanding and comfort by gobbling up tech stocks.

“Somehow Bitcoin…gives a [similar] sense of empowerment: I understand what’s happening! I can speculate and I can be rich from understanding this! That kind of is a solution to the fundamental angst,” Shiller told Quartz.

There is no question that investors have been exuberant about cryptocurrencies this year. ICOs have raised over $2 billion in 2017. The question is whether the exuberance is irrational. As a number of financial experts answer that question in the affirmative, once-exuberant cryptocurrency backers are growing skittish.

Featured image via Wikimedia Commons

Centene to acquire Fidelis Care for $3.75 billion

Centene, the United States’ largest Medicaid managed care provider, announced Tuesday that it has reached a “definitive agreement” to acquire Fidelis care for $3.75 billion, USA Today reports. 

The deal is scheduled to close in early 2018. It awaits the approval of various New York regulators, who will, among other things, evaluate it for compliance with the NY Not-for-Profit Corporation Law.

With the acquisition, Centene expects to generate $60 billion in annual revenue in 2018 and $100 million in savings by 2019. The firm reported $40.6 billion in annual revenue in 2016. Based in St. Louis, the company ranks among the largest publicly held companies in Missouri in terms of revenue.

Centene hopes to maintain a debt-to-capital ratio of 40 percent in the 18 months following the acquisition.

Managed care providers like Centene and Fidelis Care function as intermediaries between federal and state governments—which fund Medicaid programs—and Medicaid beneficiaries. The State pays such companies a premium in exchange for providing the services to which a beneficiary is entitled. USA Today describes managed care providers as the “private market option for Medicaid recipients.”

Fidelis works with 70,000 health care providers to provide health insurance plans to 1.6 million New York residents. The company brought in $4.8 billion in revenue in the first six months of 2017, according to Centene’s announcement.

Centene serves more than 12.2 million members in 28 states, but prior to the Fidelis acquisition has no presence in New York state. The deal will give Centene a leadership position in that state’s managed care market, the second-largest such market in the nation, according to Centene’s statement. The company is already the leading Managed Care Organization (MCO) in the other three largest MCO markets in the country: California, Florida and Texas.

Centene partners with healthcare providers at the state level to offer care tailored toward the needs of a given community.

“We believe our over 30 years of experience, our local approach to the provision of healthcare, and our expertise and capabilities in caring for underserved populations will support the next generation of leadership in government programs in New York State,” said Michael F. Neidorff, chairman, president and CEO of Centene. “We look forward to partnering with the state of New York’s healthcare professionals as we continue to deliver on our mission of transforming the health of the community, one person at a time.”

Fidelis shares Centene’s emphasis on local involvement and affordable care for as many people as possible. The former company’s website says: “From the beginning, Fidelis Care has worked to be part of the social fabric of local communities, impacting people’s lives with one of the most basic human rights – access to quality, affordable health coverage and care.”

“Centene’s and Fidelis Care’s missions are fully aligned in terms of promoting health through high quality, accessible care and services for all and advocating for health policy that accords true dignity and respect for all people, especially the underserved,” says Neidorff.

Fidelis Care CEO Patrick J. Frawley says his company’s “mission and values” are its “foundation,” and that Centene shares those values.

According to a CBSNews report, The Archdiocese of New York, a key Fidelis backer, said the “uncertain regulatory environment” in the U.S. in part motivated the sale. Washington’s sluggishness in replacing the Affordable Care Act has been widely publicized. 

CBS further notes that the Archdiocese plans to use proceeds from the sale to establish a healthcare foundation that will “operate in conformity with Catholic values.”

Founded in Milwaukee in 1984, Centene has been publicly traded since December 2001. Its market capitalization is $14.2 billion.

As of 2:34 EST Monday, the company’s shares have risen 7.2 percent on news of the Fidelis acquisition.

Featured image via Pixabay

Equifax stares down almost two dozen class actions after cyberattack

Credit reporting and monitoring company Equifax is facing at least 23 proposed class action lawsuits in the wake of its announcement Thursday that a cyber attack compromised the personal information of up to 143 million Equifax customers, USA Today reports.

Various law firms have filed suits in 14 different states as well as D.C., according to USA Today. More suits will likely come. Victimized customers may receive a pretrial settlement from Equifax, and/or may be entitled to some portion of any financially pejorative judgment levied against the firm.

“Equifax probably injured 143 million people, which is kind of a record…with 143 million people it doesn’t surprise me there are already 23 suits,” said John Coffee, who directs the Center on Corporate Governance at Columbia Law School.

USA Today notes that the number of people the breach potentially victimized represents 44 percent of the U.S. population.

“Assume that if you’re an American with a credit card or a mortgage, your data has been leaked,” Zach Whittaker, security editor for CBS’s ZDNet, tweeted.

Hackers carried out the attack from mid-May through July, seizing customers’ names, social security numbers, birth dates, addresses and, in some cases, driver’s license numbers. Equifax says it became aware of the breach in late July. The company alerted the public of the incident on September 7. In the interim, Equifax hired third-party consultants to investigate the crime and provide suggestions as to how the company might bolster its cyber-defenses.

Many of the lawsuits take issue with the lag time between Equifax’s discovery of the attack and the firm’s notification of the public. USA Today says one suit calls the delayed disclosure “willful, or at least negligent.” Another argues that the delay “deprived [consumers] of their opportunity to meaningfully consider and address issues related to the potential fraud, as well as to avail themselves of the remedies available under the FCRA (U.S. Fair Credit Reporting Act) to prevent further dissemination of their private information.”

The company would presumably argue that it was justified in assessing the nature and extent of the attack before alarming the public.

A third suit notes that Equifax fell victim to similar attacks earlier this year, as well as in 2013 and 2016. Therefore, said suit argues, Equifax “knew and should have known of the inadequacy of its own data security.”

Other filings take aim at TrustedID, an Equifax service that provides identity theft protection and credit monitoring. One document says the company “failed to disclose to consumers that it owned TrustedID,” and baited customers into signing up for the service.

To help customers identify whether their information was compromised by the attack, Equifax is offering free TrustedID service to all U.S. customers

New York Attorney General Eric Schneiderman, who is investigating the Equifax case, took issue with a clause in the agreement Equifax requires TrustedID members sign. The clause in question says that in signing up for TrustedID, a user waives his/her “right to bring or participate in any class action…or to share in any class action awards.”

“This language is unacceptable and unenforceable,” Schneiderman tweeted Friday. “My staff has already contacted @Equifax to demand that they remove it.”

Equifax subsequently explained that the waiver does not prohibit TouchID members from participating in class actions regarding the cyber security incident.

In addition to Schneiderman, other government entities are pursuing the Equifax case. USA Today obtained a copy of a letter Senators Omin Hatch and Ron Wyden, both of whom hold key positions on the Senate Committee on Finance, sent to Equifax requesting details about the attack and the manner in which the company is handling it.

The letter requests a timeline of the breach and asks how Equifax is identifying affected customers and what measures the company is taking to limit consumer harm. The document also asks Equifax to clarify the amount of information that was compromised.

Legal arguments must take place before the proposed suits achieve class action status. If the court grants class action status, USA Today says, a “federal panel on multi district litigation” will likely consolidate the suits into a single case, then assign that case to a judge, who would, in turn, appoint one law firm or a group of law firms as plaintiff counsel.

At the market’s close Tuesday, Equifax stock has dipped 18.7 percent since the original announcement. 4.7 percent of the drop has come since Monday morning when news of the proposed class actions broke.

Featured image via Pixabay

Harvey and Irma combined could prove more expensive than Katrina

Moody’s Analytics estimates that Irma will cost the U.S. economy between $64 billion and $92 billion, CNN reports. Insured losses resulting from the storm will range between $20 billion and $40 billion, the firm said.

Moody’s estimated Harvey-related costs between $86 billion and $108 billion, CNBC notes.

Harvey and Irma will likely cost a combined $150 billion to $200 billion, Moody’s chief economist Mark Zandi says, per CNN.

Hurricane Katrina cost the U.S. about $160 billion (adjusted for inflation) when that storm hit in 2005. It was the most expensive natural disaster in U.S. history. Irma’s and Harvey’s combined economic damage will likely exceed the Katrina figure.

Irma has crippled Florida’s tourism industry, turning much of the state into the kind of water park nobody wants to see. Miami and Tampa saw four feet of storm surge, and three to five feet of storm surge, along with a foot of rain, inundated Jacksonville. The extent of the damage to business operations remains largely unknown but is presumably considerable.

Meanwhile, oil refinery operations in Texas continue to reel in the wake of Harvey. About 13 percent of the United States’ refinery capacity remains offline in Texas, according to CNN.

Last Thursday, the federal government said joblessness claims rose by 62,000, to 298,000, in the days following Harvey, CNBC notes.

The two storms together could cost the U.S. between $20 billion and $30 billion in economic output, Moody’s said per CNBC. The firm has dropped its third-quarter forecast of the nation’s GDP growth by half a percentage point, to 2.5 percent.

Zandi notes that the recovery of the nation’s economy will depend on the speed with which Florida and Texas can revive their tourism and oil industries, respectively, but says he expects the rebuilding effort to provide an economic boost that will put the U.S. economy back on track by the year’s end.

“The longer-term economic impact of the storms should be nil,” said Zandi per CNN.

William Dudley, the president of the New York Federal Reserve, echoed Zandi’s analysis. While natural disasters such as Irma and Harvey disrupt industry, create scarcity and raise prices in the short-term, the rebuilding effort boosts the economy, he said per CNBC.

“The long-run effect of these disasters unfortunately is it actually lifts economic activity because you have to rebuild all the things that have been damaged by the storms,” Dudley said in a live interview with CNBC.

He added: “I would expect that by the time we get to the end of the year and early 2018, the transitory negative effects of this storm I think will be over and we actually will start to see some of the benefits of the rebuilding efforts in terms of boosting the economy.”

Recovery efforts following a natural disaster create jobs, compel the government to increase infrastructure spending, and bring other economic stimuli.

For instance, Congress and President Trump agreed last week to raise the debt limit for three months to facilitate relief efforts in the wake of the storms, and the House approved $7.85 billion aid package for Harvey relief last Tuesday, the New York Post reports.

According to Reuters, Vice President Mike Pence said Sunday that the government would use all of its resources to aid Irma victims.

While the storms’ long-term impact on the economy at large may be negligible or even positive, their financial impact on a small scale can, of course, be devastating. Irma and Harvey have destroyed homes, businesses, valuables and other crucial assets.

“Think of the wealth destruction created by these hurricanes,” said Dan North, chief economist for Euler Hermes, North America, per CNBC.

In discussing Irma relief, President Trump was quick to point out that human considerations outweigh economic ones. “Right now, we are worried about lives, not cost,” he said, per Reuters.

Irma’s death toll in the U.S. rose to 12 Monday, ABC News reports. The Associated Press reported last Thursday that Harvey has killed 70. The hardship the storms have brought is incalculable; as one small example, Irma left 2 million Floridians without power. They regained power Tuesday morning.

Featured image via Wikimedia Commons

Spanish Data Protection Agency fines Facebook $1.4 billion

The Spanish Data Protection Agency (AEPD) has fined Facebook €1.2 million (just under $1.44 million) for three violations of data protection laws, TechCrunch reports. The two less serious infractions carry fines of €300,000; the more serious one would cost the social networking giant €600,000.

The AEPD’s investigation found that Facebook’s privacy policy contains “generic and unclear terms,” and does not adequately familiarize a user possessing “an average knowledge of the new technologies” with the ways in which his/her personal data is collected, stored and used, the regulator said.

Facebook gathers data from users’ actions on its site, as well as from third parties. The company uses some of that data for advertising purposes, and some for “secret,” undisclosed purposes, according to the AEPD. Facebook also gathers data regarding people’s behavior on third-party sites that feature embedded Facebook “Like” buttons.

The AEPD says Facebook collects the personal data even of internet users who do not hold accounts with the social media service when such users visit a Facebook page. The company tracks account holders’ behavior on third-party sites, even when an account holder is not logged into Facebook. In this last case, the AEPD says, “the platform adds the information collected in [third-party] pages to the one associated with your account on the social network.”

Non-Facebook users, then, are unaware that the social media company is harvesting their personal data, and Facebook account holders are unaware of the nature and extent of the data being harvested. Other European regulators, TechCrunch notes, have made similar accusations against the company.

The AEPD also alleges that Facebook unlawfully retains the data it has collected from a given user even after that user terminates his/her Facebook account. The company “captures and treats information [concerning former users who have deleted their accounts] for more than 17 months [after an account has been terminated] through a deleted account cookie,” the regulator says, even though the information in question is “no longer useful for the purpose for which [it was allegedly] collected.”

Facebook intends to appeal the AEPD’s ruling even though, as TechCrunch notes, the $1.4 million sum of the fines represent but a minute fraction of the $27.64 billion in revenue the company reported in 2016. The motivation behind Facebook’s appeal of the penalties, then, is not financial but political. The company aims to protect its public image by proving that it does not violate users’ privacy.

“We take note of the DPA’s decision with which we respectfully disagree. Whilst we value the opportunities we’ve had to engage with the DPA to reinforce how seriously we take the privacy of people who use Facebook, we intend to appeal this decision. As we made clear to the DPA, users choose which information they want to add to their profile and share with others, such as their religion. However, we do not use this information to target adverts to people,” Facebook said in a statement.

Facebook also contends that because its headquarters of its European operations are situated in Ireland, the company is subject only to Irish data protection laws.

In May, the EU is scheduled to implement tighter General Data Protection Regulation (GDPR), which will permit fines of up to four percent of a company’s global annual turnover, according to TechCrunch. Should Facebook be convicted of an infraction under the new rules, the company could face a fine of as much as $1 billion.

The new GDPR will also expand the definition of personal data and give EU citizens the right to demand that their personal data be deleted. It will likely also allow regulators across the EU to work together to police companies like Facebook that operate across multiple jurisdictions.

Per TechCrunch, Facebook says it has assembled “the largest cross functional team in the history of the Facebook family” to “fully analyze the legislation and help us understand what this would mean from a legal, policy and product perspective.”

“Ahead of next May we are working with our product, design and engineering teams to enhance existing products and build new products in a way that simultaneously provides an intuitive, user-centric experience and permits us to meet our obligations under the GDPR,” said Stephen Deadman, Facebook’s deputy chief global privacy officer, in a statement.

The privacy policy, the AEPD contends, contains “generic and unclear terms,” and “inaccurately” describes the manner in which Facebook uses user data.

Featured image via Pixabay

Markets rise as Irma weakens, North Korea anniversary passes without nuke test

Markets around the world are rising as Florida missed the worst of Irma this weekend, and as North Korea’s founding celebration, which took place Saturday, did not include a missile test, Reuters reports.

Irma hit the Florida keys Sunday as a Category 4 hurricane, then came into Miami, damaging several buildings and creating a storm surge that caused flooding in the downtown area of the city, The Wall Street Journal reports. The full extent of the damage remains unknown, as many of the hardest-hit areas are still inaccessible. The Journal points out that the National Weather Service expects severe conditions to persist in central and western Florida.

Irma continues to lose strength, The Washington Post notes. By Tuesday, experts expect it to weaken to a tropical depression. But, the storm remains capable of producing hurricane-force gusts, and will likely create a “life-threatening” storm surge, cautions the National Hurricane Center. A storm surge warning is in effect across much of the Atlantic and Gulf coasts.

The Post cites a National Weather Service tweet that says Irma’s storm surge produced record flooding in downtown Jacksonville Monday morning.

Nonetheless, Floridians caught something of a break over the weekend. On Friday, the Journal says, some models projected that the storm would hit Miami and east coast Florida head-on—instead, the storm turned toward the gulf coast.

“For now, we’re seeing a bit of a relief rally [in the market]. It does appear that the worst-case scenario for Florida has been evaded,” said Peter Cardillo, chief market economist at First Standard Financial in New York, per Reuters.

Meanwhile, North Korea tested no missiles over the weekend, though, according to the New York Times, leaders did hold a massive gala for the country’s nuclear scientists Saturday, in conjunction with national anniversary celebrations.

Last Sunday, North Korea successfully detonated its sixth nuclear bomb.

The MSCI AC World Equity Index, MIWD00000PUS, which tracks 2,400 stocks in 47 countries, according to Reuters, surged to a new high Monday morning, and as of 1:27 Eastern Monday. DXY, an index that compares the U.S. dollar to six other currencies, has jumped 33 cents (0.36 percent) since 11:59 p.m. Sunday. DXY is recovering after having hit a two-and-a-half-year low Friday.

Meanwhile, stock markets in Tokyo had their best session since June, according to Reuters. Relief about the situation in North Korea, as well as a weakening yen, spurred the surge.

In the U.S., shares are up one percent across Wall Street, Reuters says. As of 2:30 p.m. EST Monday, the DOW Jones Industrial Average has risen 260.19 points (1.19 percent) since it closed Friday. The S&P 500 has jumped 1.06 percent since Friday’s close, and now sits at 2487.67.

Demand for gold is falling, as investors are, according to Reuters, more inclined to assume risk given the relative stability of the U.S.’s relationship with North Korea and the relatively mild damage Irma wreaked upon Florida. As of 2:47 Eastern Monday, one troy ounce of gold is worth $1330.61, a decrease of $10.64 (0.8 percent).

Oil investments are falling out of favor as well, as the market frets over Irma’s and Harvey’s impacts on the supply of oil in the U.S., which Reuters says consumes more oil than any other nation.

“Brent crude oil futures for November delivery LCOc1 were down 66 cents [1.23 percent] at $53.12 a barrel, while benchmark U.S. West Texas Intermediate crude CLc1 declined by 33 cents [0.7 percent] to $47.15,” Reuters writes.

Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis, said that a weaker dollar, along with lower interest rates, will provide more fuel to the U.S. economy in the near future.

“We are massively stimulating this economy that’s already doing pretty well,” he said. “That’s likely to accelerate an already-good economy even further the next 12 months.”

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Amazon is taking applications to determine the location of its second headquarters

Amazon announced Thursday that it intends to build a second headquarters facility in North America, The Washington Post reports.

The new location will be “a full equal” to the company’s existing Seattle hub, CEO Jeff Bezos said in the announcement. Amazon will spend more than $5 billion on its new home, which will employ more than 50,000 people making an average salary of $100,000 per year. In addition to the 50,000 long-term jobs, Amazon’s new facility will create “tens of thousands” of ancillary, temporary gigs, the company says.

The company has yet to pick an exact location for the new campus and is allowing state and local governments to apply to host the new site. The application period will run through October 19, and Amazon will announce its decision next year.

The application process is open to any metropolis in North America. Chicago, Philadelphia, Toronto and other cities have already indicated intentions to apply, according to the Post. Amazon did not explicitly comment on how willing it would be to move to Canada or Mexico but did use the word “province” several times in the statement, Jed Kolko, the chief economist at indeed.com, notes per the Post.

In addition to offering jobs, the $474 billion tech giant intends to make investments in the surrounding community. The company says its investments in Seattle boosted the city’s economy by $38 billion from 2010 to 2016.

With the potential benefit to the local economy of housing an Amazon headquarters so high, the company will seek tax breaks and other incentives. The Post cites data collected by Good Jobs First showing that Amazon received $241 million in subsidies to support the building of new facilities in 29 U.S. cities in 2015 and 2016.

Many analysts believe that by initiating an application process, Bezos intends to spur a bidding war between governments throughout the continent.

“This was like an open letter to city leaders saying, ‘Who wants Amazon and all our jobs?’” Brad Badertscher, an accounting professor at the University of Notre Dame, told the Post. “This is Jeff Bezos doing what he does best: adding shareholder value and getting the most bang for the buck.”

Amazon said it is taking applications because it “wants to build the new headquarters in “a city that is excited to work with us and where our customers, employees, and the community can all benefit.”

Though plenty of cities appear to be “excited to work with” Amazon, the Post points out that Amazon’s presence in a given locale is not without drawbacks. Though the company has contributed tens of billions of dollars to Seattle’s economy, the giant’s rise has also precipitated gentrification in the area. The Post cites The Seattle Times as noting that the median home price in the Seattle area has jumped from $605,900 to $730,000 in the past 12 months—a 17 percent increase.

Moreover, traffic problems have surfaced and some say Amazon’s presence has compromised Seattle’s culture and “changed the city for the worse.”

Rita McGrath, a professor at the Columbia Business School in New York, points out, per the Post, that Amazon may choose to build its second home in an area where the cost of living is more moderate than it is in Seattle.

“It’s hard to attract people [i.e., potential employees] if they can’t afford the housing available locally,” she said.

Amazon has said it wants the new facility to be near a metropolitan area with a population of at least one million and a thriving tech industry from which the company can pull talent. The new digs will need to be within 45 minutes of an international airport, with direct access to mass transit.

Kolko notes that an east coast location would balance Amazon’s presence throughout the continent and put the company closer to its European operations.

Amazon also seeks at least eight million square feet (183.65 acres) worth of land—it plans to expand the new facility over the next decade. The Seattle campus spans 8.1 million square feet (185.95 acres).

The company needs the room, the Post notes. It plans to add 100,000 employees by the middle of next year and already employs 380,000 people worldwide. New Amazon packing and shipping facilities are coming to New York, Ohio and Oregon. And, the company just bought Whole Foods—and its 465 stores—for almost $14 billion (Whole Foods’ headquarters could not accommodate Amazon, the Post says.)

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Facing $5 billion worth of debt, Toys “R” Us hires restructuring consultants

Toys “R” Us has hired law firm Kirkland & Ellis as restructuring consultants to help the reeling toy giant negotiate its debt as the holiday season approaches, CBS News reports. The company may seek bankruptcy protection.

In its first quarter earnings statement, the company reported over $5 billion in long-term debt as of April 29. Per CBS, $446 million of that is due by the end of this fiscal year, and $2.2 billion is due by the end of next fiscal year. Although Toys “R” Us is privately-held, it reports earnings because its debt is publicly traded, according to CBS.

“What Toys ‘R’ Us has been doing is extending the debt as it comes due and paying higher interest rates,” Howard Davidowitz, the head of the retail consultancy and investment bank Davidowitz & Associates, told CBS.

That approach has caused the debt to pile up. “They have got enormous debt,” says Davidowitz.

In its quarter two earnings call, scheduled for September 26, the company plans to discuss new fiscal strategies, and to unveil a program intended to improve customers’ experiences over the holiday season, spokeswoman Amy Von Walter told CBS.

Davidowitz said, per CBS, that a considerable percentage of Toys’ R Us’ debt results from the $6 billion sale of the company to a group of notable private equity firms in 2015. No evidence is available to corroborate the claim, though.

Toys “R” Us’ debt has prevented it from investing in online sales, which has, in turn, hampered its ability to compete with the likes of Walmart and Amazon. Over the last four years, CBS notes, the iconic toy retailer has spent just $100 million to bolster its online presence.

In 2013, Toys “R” Us generated 18 percent as much revenue as Amazon did; last year, Toys “R” Us’ figure was 8.5 percent of Amazon’s.

After Toys “R” Us failed to deliver many online orders in time for Christmas in 1999, the company partnered with Amazon in an effort to establish a stronger eCommerce presence. But, in 2004, Toys “R” Us sued Amazon for violating an exclusivity agreement, and relations soured. In 2009, Amazon paid Toys “R” Us $51 million to settle the case.

Founded in 1948, Toys “R” Us has been a household name in American industry for decades. Though the company has lost ground to competitors in recent years and is now buried under a potentially fatal mountain of debt, it maintains a strong presence in the market.

CBS quotes a June report by Moody’s, a credit rating agency, as saying: “We believe Toys ‘R’ Us remains a compelling competitive force in the toy and baby sub-segment of retail, however it is also our view that Toys’ competitive position continues to suffer challenges as a result of many of its larger, better-capitalized competitors such as Walmart, Target and Amazon using toys as traffic-drivers to both brick-and-mortar locations and websites, especially during the key holiday season, which seems to begin earlier every year.”

Forbes ranked Toys “R” Us the 22nd largest private company in the U.S. based on full-year revenue in 2016.  That year, the toy giant brought in $11.4 billion in revenue.

But, that figure marks a 2.2 percent drop from 2015. In fact, the company’s revenue has fallen in each of the last five years, according to data collected by D&B Hoovers. Since 2013, annual revenue has plummeted more than $2 billion—almost 15 percent. From 2013 to 2014, revenue dropped $1 billion (7.4 percent).

Gross profit has fallen $843 million—17 percent—since 2013, from $4.95 billion to $4.11 billion.

Toys “R” Us has reported net losses every year since 2014. That year, the company lost more than $1 billion. The bleeding has subsided each year since, though. In 2016, Toys “R” Us lost $36 million.

If anyone needs a good holiday, it’s Toys “R” Us.

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Deere & Co. to acquire Blue River Technology for $305 million

Deere & Co. announced Wednesday that it has signed a “definitive agreement” to acquire Blue River Technology, an agriculture technology company, in a $305 million deal, TechCrunch reports. The deal will likely be finalized next month.

Blue River specializes in “precision farming,” a technique that uses technology to streamline traditional farming methods. Precision farming is crucial to Deere’s future, the company said in its statement regarding the deal.

“As a leader in precision agriculture, John Deere recognizes the importance of technology to our customers. Machine learning [read: artificial intelligence] is an important capability for Deere’s future,” said John May, President, Agricultural Solutions, and Chief Information Officer at Deere.

Technology reduces labor costs—machines now perform tasks human beings used to have to do—and maximises yield.

Blue River’s flagship product, which it dubs “See and Spray,” uses computer vision to identify and exterminate weeds, thereby reducing herbicide waste. The system references a given plant against a massive image library to determine whether that plant is a weed. If it is, the machine sprays it with herbicide but leaves surrounding soil and crops untouched.

Another Blue Ridge offering, LettuceBot, thins lettuce crops. Farmers plant more lettuce seeds than they wish to cultivate to ensure that enough seeds sprout to create a proper yield. LettuceBot uses technology to evaluate the health, uniformity of size, and spacing of each lettuce plant and determine which plants need to be eliminated. Once LettuceBot identifies unwanted plants, it kills them with a concentrated dose of fertilizer.

“LettuceBot completes a labor-intensive task quickly and easily…and does so with far greater precision than a human hand,” according to Blue River’s website. The machine evaluates 5,000 plants per minute, sprays unwanted ones with quarter-inch precision, and covers 40 acres per day.

“Blue River is advancing precision agriculture by moving farm management decisions from the field level to the plant level,” said Jorge Heraud, co-founder and CEO of Blue River Technology in the aforementioned statement. “We are using computer vision, robotics, and machine learning to help smart machines detect, identify, and make management decisions about every single plant in the field.”

Blue River flies drones over fields to assess the efficiency and effectiveness of See and Spray, LettuceBot and other machines.

In November 2015, Deere & Co. reached an agreement with Monsanto Co. to purchase the latter firm’s Ag-Tech subsidiary, Precision Planting, LLC. But, the companies abandoned the deal in May after the U.S. Department of Justice filed a lawsuit to block it. The DOJ said the acquisition would have given Deere & Co. an 86 percent share of the “high-speed precision planting market,” TechCrunch’s words reports.

When it announced the Monsanto deal in 2015, Deere used the same language it is now using to describe the Blue River acquisition, saying the companies had reached a “definitive agreement.”

The Monsanto deal would have cost Deere $190 million, the DOJ estimated. The Blue River acquisition will be almost twice as expensive.

Founded in Sunnyvale, CA in 2011, Blue River remains privately held. TechCrunch cites CrunchBase as saying the company has raised a total of $30.5 million in funding. The firm employs 60 people, all of whom will remain in Sunnyvale even though Deere is based in Moline, Illinois.

Forbes reported in March that Deere has already developed a number of high-tech farming solutions. SeedStar Mobile, for instance, provides data on the performance of equipment in real time, allowing farmers to make immediate adjustments to maximize their machines’ efficiency.

Deere is also developing self-driving farm vehicles that can navigate themselves through the rows of a corn field without damaging crops, Forbes says.

The farming industry as a whole is increasingly embracing technological advancements. “The idea that agriculture is now a tech industry is firmly established,” Roger Royse, a Silicon Valley attorney who works with ag-tech startups, told Forbes. “The farming community knows they have to embrace this.”

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IBM to spend $240 million on an AI research lab at MIT

IBM will spend $240 million to fund a Watson-branded AI research lab at MIT, CNBC reports. At the facility, MIT and IBM researchers will collaborate to create AI algorithms, optimize AI hardware, study the societal implications of AI, and apply AI to the business world.

Researchers will work at the MIT campus as well as at IBM’s nearby Watson Health and Securities Center.

Tech companies are increasingly partnering with institutions of higher learning to develop and explore AI technology. DeepMind, an Alphabet subsidiary dedicated to AI research, has announced plans to open a research facility in Edmonton, Canada, at which the company will collaborate with researchers from the University of Alberta.

Alphabet says “more than a dozen [University of Alberta] graduates have joined…DeepMind.” DeepMind has sponsored the University’s machine learning lab.

The University of Alberta program marks DeepMind’s first expansion outside of the United Kingdom.

According to CNBC, Alphabet and Microsoft have both announced intentions to fund research at McGill University and the University of Montreal, both of which are located in Montreal. The combined total of the two tech giants’ contributions is less than $10 million.

As artificial intelligence technology becomes more viable in a widening array of business sectors, tech companies are increasing their focus on the field, notes Dario Gil, vice president of AI and Q (for quantum) at IBM, per CNBC.

“AI as a field has been going on for many decades, but it is quite obvious right now it has raised to a level of centrality for every major technology company, including us and frankly every other business and area,” Gill told CNBC.

Research at the new IBM-MIT facility will center around the cyber security and healthcare fields. In the healthcare sector, IBM says it has already developed technology by which Watson can analyze “genetic testing results” to improve the precision of cancer medication. Watson also has the potential to discover new drugs that might aid patients who are resistant to established treatments, according to IBM.

But, some say Watson has thus far failed to deliver on the promises its creators made on its behalf.

Since IBM began marketing and selling Watson as a cancer treatment resource in 2014, less than 50 hospitals have adopted the system, which IBM envisioned as a new industry standard.

Watson has the capacity to gather and sift through unfathomable amounts of data with inhuman speed, but the human beings must tell the computer how to interpret the data it collects. In other words, Watson struggles to synthesize data. Therefore, some have cast doubt on IBM’s claims that the computer can identify novel medications and treatment methods.

Given IBM’s commitment to study the healthcare applications of AI at the MIT facility, researchers at the new lab will likely work to hone Watson’s cancer treatment abilities.

In February, IBM made Watson available as a cyber security “cop.” The company said it had “trained [the robot] on the language of cyber security.” IBM found that human cyber security teams analyze more than 200,000 “security events” every day, and waste 20,000 hours per year “chasing false positives.” Were these processes automated, cyber security could become more efficient and effective.

And with hackers developing new threats at an accelerating rate, the workload of cyber security teams is ever-increasing.

Of course, there will be kinks to iron out in Watson’s cyber security functionality as well.

As yet, the practical experience of AI powerhouses like Watson is limited. “The field of artificial intelligence, despite its progress, is in its infancy,” Gil said.

Still, artificial intelligence is increasingly hard to ignore. As more and more minds collaborate to refine robots like Watson, and as such robots gain more and more “hands-on” experience, AI is poised to become an integral part of the business world.

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Starting school later could boost the U.S. economy by $83 million over 10 years

A recent study conducted by the RAND Corporation suggests that delaying the start of the school day until 8:30 a.m. could boost the U.S. economy by $83 billion over the course of a decade, madison.com reports.

Pediatric health experts have long argued that a later start to the school day would better accommodate teenagers’ sleep needs, and would improve students’ concentration, as well as their mental and physical health.

According to madison.com, up to 60 percent of teens do not sleep for the recommended eight to 10 hours per night. Researchers have correlated lack of sleep with suicidal thoughts and other adverse mental and physical health conditions.

Policymakers have been reluctant to delay the start of the school day, citing costs associated with rerouting bus schedules and making other necessary changes. However, RAND’s study finds that over the course of a few years, the economic benefits derived from a later beginning to the school day would outweigh the costs of implementing the change.

“A small change could result in big economic benefits over a short period of time for the U.S. In fact, the level of benefit and period of time it would take to recoup the costs from the policy change is unprecedented in economic terms,” said Marco Hafner, a senior analyst at RAND Europe who co-wrote the report.

The study identifies two primary factors that would precipitate economic growth if school started later. First, traffic fatalities would decrease. Therefore, more children would grow to adulthood and contribute to the country’s workforce.

The RAND study cites CDC and AAA data indicating that one in five fatal traffic accidents involves a tired driver. RAND also cites a study conducted in 2008 that found that starting school later would reduce the rate of traffic accidents by 16.5 percent.

Second, academic performance would improve, boosting high school graduation and college attendance rates. Another study indicated that giving students an additional hour of sleep would increase their likelihood of graduating high school by 8.6 percent, on average, and their likelihood attending college by 13.4 percent, on average.

Students who graduate high school stand to earn a higher income than those who do not. Those who attend and/or graduate college generally make higher wages than those who do not. Higher income means more spending and, therefore, increased economic contribution.

The economic benefits of the policy shift would increase at an accelerating rate over the first 15 years following the implementation of the policy. There would be no change in economic output one year after the shift, for the students graduating that year would have benefited from just one year of enhanced academic performance. After two years, though, the economy would grow by $9 billion; after five, by $37 billion; and after 15, by $140 billion.

RAND claims to have been conservative in many aspects of the study,

“Throughout the cost-benefit projections, we have taken a conservative approach when establishing the economic gains,” Hafner said. “We have not included other effects from insufficient sleep — such as higher suicide rates, increased obesity and mental health issues — which are all difficult to quantify precisely. Therefore, it is likely that the reported economic and health benefits from delaying school start times could be even higher across many U.S. states.”

Still, RAND says, the study supports the conclusion that a later school start time would benefit the nation’s economy as well as the health of students.

“From a policy perspective, the potential implications of the study are hugely important. The significant economic benefits from simply delaying school start times to 8.30 a.m. would be felt in a matter of years, making this a win-win, both in terms of benefiting the public health of adolescents and doing so in a cost-effective manner,” says said Wendy Troxel, a senior behavioral and social scientist at RAND who co-wrote the report.

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Lego’s revenue drops for the first time in 13 years

Tuesday, Lego reported a decline in revenue for the first time in 13 years, The LA Times reports. Net profit also fell.

The company’s revenue over the first half of 2017 came in at $2.4 billion, a five percent drop year-over-year. Net profit dipped three percent year-over-year, to $544 million.

The revenue decrease was especially pronounced in established markets like the U.S. and Europe, but revenue in nascent markets like China grew by double digits, the company said. The press release hints that Lego intends to double down on its presence in China and other budding markets.

Sales of new lines, such as the Lego Chima have been underwhelming, according to the Times, while classic models like Lego City, Lego Friends, Lego DUPLO and Lego Technic continue to fly off the shelves.

“We are disappointed by the decline in revenue in our established markets, and we have taken steps to address this,” said Lego Group Chairman and former CEO Jørgen Vig Knudstorp.

Lego says it has built “an increasingly complex organization” over the past five years to facilitate growth. The strategy worked for a time: from 2011 to 2016, the company’s revenue doubled, the Times notes. Now, though, the bureaucratic web has become too convoluted to sustain further growth, the company says.

“…We have added complexity into the organization which now in turn makes it harder for us to grow further. As a result, we have now pressed the reset-button for the entire Group,” Knudstorp said.

In pressing the reset button, Lego plans to trim its global workforce of 18,200 by 18 percent, eliminating 1,400 jobs. “Unfortunately, it is essential for us to make these tough decisions,” Knudstorp said.

The company hopes the streamlining process will “simplify our business model to reach more children.”

The toy industry is changing as video games and smartphones continue to capture children’s attention. However, Lego has succeeded in adapting. It has developed high-tech toys like Lego Boost, a programmable robot, and has licensed its characters out for video games, movies, and theme parks.

The licensing endeavors have generated significant revenue. Warner Bros.’ The Lego Movie, which hit theaters in 2014, grossed $469 million at the box office and garnered critical acclaim. Warner Bros’ has scheduled a sequel for release in 2019.

“The Lego Batman Movie,” which came out in February, brought in $312 million in box-office ticket sales and, like its predecessor, received positive reviews from critics.

On September 22, Warner will release The Lego Ninjago Movie. Analysts expect that film to generate between $35 million and $40 million in sales in its first weekend, the Times says.

Despite their success in theaters, though, the movies have failed to increase sales of related toys as much as Lego anticipated, said industry analyst Keith Snyder, per the Times.

Warner Bros. also handles Lego video games. 2015’s Lego Dimensions rose to the second spot on sales charts in the U.K. and Ireland in its first week, Forbes reported. According to VGChartz.com, Lego Dimensions has sold 3.7 million copies worldwide. Rival toys-to-life games Skylanders: SuperChargers and Disney Infinity 3.0 have sold 2.6 million and 2.8 million, respectively.

Warner is developing video-game spinoffs of The Lego Batman Movie and Ninjago.

Lego has also licensed its brand to Merlin Entertainments, a British-based company which owns and operates nine Lego-themed theme parks throughout the world, per the Times. Those parks brought in $1.9 billion in revenue in 2016—an 11.7 percent jump versus the previous year. Attendance rose 4.2 percent year-over-year in 2016, to 63.8 million.

Lego’s disappointing performance in quarter two surprised the toy industry. “This drop really was surprising and caught the industry off guard,” said Snyder per the Times. “Lego has been the golden child of the toy industry the last four years.”

“Everything hits a peak,” added Jim Silver, editor in chief of TTPM, a toy review and research firm, in reference to Lego’s surge. “At some point within a category, you can only grow so much.”

Lego has rebuilt itself before. The company was on the brink of financial collapse in 2004, but Knudstorp assumed CEO duties and steered Lego back to fiscal responsibility and sustainable success.

Knudstorp stepped down as CEO in December and became chairman. Since, two men have filled the role. Last month, Lego announced that Niels Christiansen would take the reigns from Bali Padda, who originally replaced Knudstorp.

Christiansen may have to engineer a comeback reminiscent of the one Knudstorp led if Lego is to retain its dominant position in the toy industry.

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Carpooling service Via closes investment round, plans U.S. and oversea expansion

Carpooling service Via just completed a funding round, the proceeds of which the company intends to use to expand its service in the U.S. and to establish a presence in Europe, TechCrunch reports. Via will begin London operations in the near future, and Paris service soon after.

The amount of the funding round remains undisclosed, but a source told TechCrunch the number was $250 million.

Prior to the investment round, Zirra estimated the company’s value between $450 million and $500 million, TechCrunch notes. Following the round, then, Via could be worth as much as $750 million.

Via provides carpool service to riders seeking a cheaper alternative to operations like Uber and Lyft. A single Via vehicle carries up to five passengers at a time, so customers can book rides for as little as $5 plus tax. An algorithm determines routes in real-time as customers request rides, so unlike conventional public transit systems, Via is not constrained by a preset schedule. The company’s website says the average wait time is five minutes.

Today, Via runs 24-hour service in its hometown of New York City and also operates in Washington, D.C. and Chicago. TechCrunch says the service gives about one million rides per month.

In addition to running its own operation, Via licenses its platform to other transportation companies, including Arriva—a subsidiary of German-based railway company Deutsche Bahn AG—which operates buses, trains, and other mass transit options across 14 countries in Europe, and Keolis, a subsidiary of France-based SNCF, which offers similar service worldwide.

Daimler AG, which owns Mercedes-Benz, led Via’s most recent funding round, and the two companies plan to intensify their partnership. In addition to its contribution to the funding round, Daimler will provide $50 million towards a joint venture project with Via.

The two companies have been collaborating for years, TechCrunch notes. In late 2015, Via joined forces with Mercedes-Benz Research and Development North America, Inc. to launch a pilot program in Orange County, CA, a suburb of Los Angeles. Mercedes provided Via with Metris passenger vans for that trial program.

Daimler and Mercedes will likely provide vehicles for Via’s European expansion as well. The partnership with Via will give Daimler a ready-made sales connection and will provide a platform through which Daimler can develop and test vehicles optimized for carpooling.

As tech-based transportation start-ups change the way consumers approach moving around, automakers are seeking the most efficient ways to adapt to the changes in the industry.

“One big question is, ‘what is the right vehicle?’” Via CTO and co-founder Oren Shoval told TechCrunch “There are the seating arrangements, how you connect the sensors, what kind of door it should have. This is a big piece of mobility.”

Shoval adds that the Via-Mercedes partnership will streamline and solidify Via’s service. “We also believe that the vehicles in the network, at the end of the day, it’s not just an app but a whole service that you are getting. It makes sense to have these things converge,” said Shoval.

Volker Mornhinweg, head of Mercedes-Benz Vans, echoed Shoval’s sentiment that the partnership would improve Via’s service, and added that the collaboration was important to Daimler’s long-term strategy in the changing transportation sector.

“Via is one of the most successful providers in the growing ride-sharing sector while Mercedes-Benz Vans has the perfect vehicles that are being continuously optimized for this job,” he said. “By deepening our cooperation with Via, we are thus taking the next logical step in the context of our strategy for the future and are expanding our range of new mobility services.”

Daimler launched Car2Go, which allows users to rent cars parked in various places around a city and then return those cars to one of many drop zones around town, in 2008. Now, Car2Go operates in 26 cities across North America, Europe and Asia, and serves 2.5 million registered members.

Daimler, in tandem with Audi and BMW, bought GPS mapping service Here in late 2015 and has independently acquired a number of ride-sharing companies, including Germany’s MyTaxi, the U.K.’s Hailo, and Taxibeat in Greece. All three of those services have merged under the MyTaxi umbrella since Daimler acquired them.

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Chinese authorities crackdown on cryptocurrency ICOs

Monday, the Chinese government banned the practice of creating and selling new cryptocurrencies, Reuters reports

With the rise of Blockchain technology, initial coin offerings (ICOs)—which give investors the opportunity to buy newly-created cryptocurrencies—have gained popularity. In total, Reuters says, ICOs have raised $2.32 billion since the inception of the cryptocurrency market; $2.16 billion of that amount has come in 2017.

In China this year, 65 ICOs have raised a combined 2.62 billion yuan ($394.6-million) and attracted 105,000 investors, according to Reuters.

The value of Ethereum, the cryptocurrency in which most ICOs are transacted, has plummeted on the news. On Sunday, one Ethereum token was worth $349.93. Late Monday, that figure had fallen 14.3 percent to $299.72. As of 1:33 p.m. Eastern Tuesday, Ethereum has recovered slightly; the USD-Ethereum exchange rate sits at 307.56 to one.

The Bitcoin-USD exchange rate has dropped 5.9 percent since midnight Monday morning on China’s news. Late Sunday night, one bitcoin was worth $4,632.46. As of 1:39 Eastern Tuesday, the value of a single bitcoin token is $4,359.07.

The market capitalization of the cryptocurrency industry as a whole dropped 11.66 percent Monday, from $165.095 billion to $145.833 billion. Since midnight Tuesday morning, though, the industry’s market cap has gained 1.7 percent. As of 1:55 p.m. Eastern, the industry is worth $148.358 billion.

“The large price falls can be attributed to panic amongst traders and profit-taking,” said Cryptocompare founder Charles Hayter, per Reuters.

Indeed, China’s announcement had many investors across the internet predicting doom and gloom. A participant in one chatroom set up for an upcoming ICO said “the music has stopped” for the cryptocurrency boom, Reuters reports.

“Sell all your bitcoins now,” another advised, again per Reuters.

The organizer of the ICO to which the chatroom was dedicated, which was meant to launch a new cryptocurrency called SelfSell, has suspended the project.

Regulators around the world are struggling to understand cryptocurrency investment and the risks associated with it, said Zennon Kapron, director of the Shanghai-based financial technology consultancy Kapronasia, per Reuters.

Prior to China’s announcement, the U.S. Securities and Exchange Commission, as well as similar agencies in Singapore and Canada, warned that regulations would likely be needed to control the cryptocurrency market.

The lack of regulation governing cryptocurrency and investment in it is unprecedented. Blockchain, the backbone of cryptocurrency transactions, functions without a centralized overseer.

The nature of investment in cryptocurrency is also unconventional. When one contributes to a fundraiser for a traditional company, one generally receives a share in the company and/or a security. ICO investors, Reuters notes, receive neither.

Therefore, Reuters points out, an investment in a cryptocurrency is little more than a bet that demand for that currency will exceed supply, driving up value. It is a risky bet, considering the volatility of cryptocurrencies.

With risks to investors so high, government regulators are purportedly taking strides to protect their citizens. Cryptocurrency expert and Blockchain proponent Oliver Bussman said, per Reuters, that the lack of private financial advice firms in China obligates the government to be especially vigilant in protecting the finances of its constituents.

Of course, many would argue that it is an investor’s own responsibility to protect him/herself.

Despite some predictions that China’s move spells the beginning of the end of the cryptocurrency boom, many experts believe the regulatory shutdown is but a temporary measure designed to give the country’s government time to develop a strategy by which to handle cryptocurrencies.

“China, in many ways, is no different than the U.S. or Singapore in saying, ok, we need to push back on these for now until we figure out how to deal with them,” Kapron said, per Reuters, adding that he expected regulators in China to eventually ease the ICO ban.

Bussman says, per Reuters, that cryptocurrency technology is too revolutionary, too integral to the future of global economics, to be shutdown. Cryptocurrency, he says, has already worked itself into the fabric of modern investment.

“The initial coin offering is a new business model leveraging blockchain technology and it will remain. This is not the end of the ICO – absolutely not,” he said.

Featured Image via Flickr/BTC Keychain

U.S. Labor Department releases August 2017 employment data

Friday, the U.S. Labor Department released hiring and unemployment data for August, The New York Times reports. Employers created 156,000 jobs last month—less than analysts expected.

Employers added more than 200,000 in June and July (the Department revised each of those figures downward by 41,000 in this most recent report). August’s figure marks a sequential decrease of 22%. Analysts anticipated a dip, but not one so pronounced. August job-creation figures have come in below analyst expectations in four of the last five years.

Still, job creation rose 50 percent year-over-year last month.

The unemployment rate saw a marginal sequential increase, up to 4.4 percent in August from 4.3 percent in July. Joblessness continues to hover around a 16-year low. The so-called participation rate, which reflects the percentage of able workers who are either working or looking for work, came in at 62.9 percent. It has remained more or less static over the past 12 months.

Average hourly wages rose just 0.1 percent, coming in below analyst expectations. Wages generally rise with hiring rates, but the data has gone against that trend in recent years.

As wages rise, theTimes notes, the Federal Reserve raises the federal funds rate—that is, the interest rate at which banks lend money to one another—so as to guard against inflation. But the flatness of hourly wages means inflation is minimal.

“There’s no sign of inflation, which keeps the Federal Reserve on hold in terms of interest-rate hikes, and it suggests stocks should keep doing well,” Torsten Slok, chief international economist at Deutsche Bank, said, per the Times.

Stocks are up slightly today. The DOW Jones Industrial Average is up 0.18 percent, and the Nasdaq Composite is up 0.10 percent.

There is a 30 percent chance the Federal Reserve will raise the federal funds rate when it meets in December. The Fed will also meet later this month, but will not modify the interest rate.

The Federal Reserve is watching whether workers who exited the workforce during the latest recession (which took place from January 2008 through May 2009) are re-entering now. In 2010, ten percent of Americans were unemployed. That figure has dropped by more than 50 percent as of today.

The hiring and unemployment report comes on the heels of the Department of Commerce’s publication Wednesday of national economic data for the second quarter of the year. The Department reported 3.0 percent GDP growth, up from 1.2 percent in quarter one.

Last recession hit the manufacturing sphere particularly hard. Two million jobs (just under 15 percent of the industry’s workforce) vanished. Since January 2010, though, have of those jobs have come back.

The growth is accelerating. Over the first seven months of 2017, the Times notes, factories hired 101,000 workers. In August, 36,000 more employees came on board.

Mack Truck is hiring in at its assembly plant in Pennsylvania’s Lehigh Valley, the Times notes. in illustration of the rebound of the manufacturing sector. Since 1905, Mack has built every truck it sells in North America at the Lehigh Valley plant.

In 2016, Mack lost nearly a third of its workers at the plant: the facility employed 1,875 workers at the end of 2015 and 1,287 after 2016.

Today, 1,800 people take a paycheck home from the plant, which is currently offering 26 jobs.

Because the failure of the housing market largely spurred the recession, the construction industry took arguably the biggest hit. At the beginning of 2008, 7.49 million people held construction jobs in America. The recession slashed that figure by almost 25 percent, and the industry continued to decline in the recession’s wake. At the end of January 2011, employment across the sector hit a ten-year low. 5.45 million people held construction jobs—37 percent less than of at the end of 2007.

Today, the industry employs 6.9 million people—just under 27 percent more than on March 1, 2011. It has added 101,000 jobs in 2017, including 28,000 in August.

Featured Image via Pixabay

Harvey will rank among most expensive storms ever to hit U.S.

A number of organizations have released estimates of the costs of Harvey’s destruction, The Washington Post reports. If the figures are accurate, Harvey will rank among the costliest storms ever to have hit the U.S.

A report released Wednesday by risk modeling agency RMS puts the total cost of Harvey’s devastation between $70 billion and $90 billion. The organization notes that these figures are not official estimates and that the costs will continue to rise as flooding persists.

“…with the rain still falling heavily and the waters rising, the situation is too fast-moving to be stating with certainty what the losses in Texas could be,” said Michael Young of RMS.

Flooding accounts for the lion’s share of Harvey’s damage. RMS estimates that just 10 percent of Harvey-induced economic losses are attributable to wind and storm surge damage. The remaining 90 percent is due to flooding.

Other reports support RMS’s findings. CoreLogic, another firm that gathers data on natural disasters, estimates that between $1 billion and $2 billion worth of Harvey’s damage to residential and commercial properties results from wind and storm surge damage. A third firm, S&P Global, estimated wind- and storm surge- related losses at $6 billion.

Most of the rest of the costs are, again, the result of flooding.

A standard home insurance policy, the Post notes, does not cover flood damages. Most people who elect to purchase flood coverage do so through the federal government’s National Flood Insurance Program (NFIP). But, per the Post, Federal Emergency Management Agency (FEMA) data indicates that just 17 percent of those who own property in the areas where Harvey struck hardest carry flood insurance through NFIP.

Reuters says CoreLogic’s report indicated that 70 percent of the flood damage Harvey wreaked and continues to wreak will be uninsured.

“The majority of [the financial] losses [Harvey causes] will be uninsured,” Young, of RMS, said.

Still, NFIP reports that 500,000 people who own property in Harvey’s path do carry flood insurance policies, and expects the storm to cost as much as or more than any similar disaster to date. CoreLogic estimates that between $6.5 billion and $9.5 billion worth of the flood damage Harvey wreaked on residential properties is insured.

Harvey has caused 51 inches worth of “observed cumulative” rainfall, according to RMS. No other U.S. storm has induced so much rain. Tropical Storm Allison, which hit the Gulf Coast in 2001, produced upwards of 30 inches of rain, according to AccuWeather. Hurricane Katrina produced between five and ten inches.

Like Harvey, though, Katrina caused catastrophic flooding. But, the latter storm wreaked most of its damage by virtue of a 28-foot storm surge, which smashed levees.

Katrina left $108 billion worth of damage in its wake after it ravaged Louisiana in 2009, according to a report by theBalance.com. Half of the costs were attributable to flooding in and around New Orleans.

In addition to wreaking financial devastation on property owners in its path, Harvey will likely take a toll on the larger U.S. economy. The storm has forced a shutdown of almost a third of the country’s oil and gas refinery capacity, according to CBS News, and has crippled pipelines that carry oil from the Gulf to the rest of the nation.

The Colonial Pipeline, which runs from Houston to the Northeast and provides 40 percent of the gasoline across the American South, is currently non-operational.

Gas prices are soaring in Houston and around the country. Since Harvey made landfall Friday. the average per-gallon price of gas jumped more than $0.20 in Texas and just under $0.17 across the nation, per AAA.

Former Shell Oil president John Hofmeister said oil production in the Gulf Coast is crucial to the industry.

“Without it we’d be in gas lines all the time. We need that Gulf Coast,” Hofmeister said.

He added that the refineries will not be operational until mid-September at the earliest, Thanksgiving at the latest.

Hurricanes Katrina and Rita demonstrated how damage to oil and gas production can hurt the US economy. They damaged 19 percent of U.S. oil production, shutting down 113 “offshore oil and gas platforms” and damaging 457 pipelines.

In the quarter following Katrina, U.S. economic growth fell 65 percent. But, in the subsequent quarter, the growth rate increased 270 percent and came in 26 percent higher than it had been in the quarter prior to the storms.

Granted, the deceleration of economic growth after was due only in part to oil industry slowdowns.

Featured Image via Wikimedia Commons

Consumers accuse Best Buy, other Texas retailers of price-gouging in Harvey’s wake

A photo taken at a Best Buy in Houston after Hurricane Harvey shows 12-packs of Smart Water listed for $29.98 and 24-packs of Dasani water advertised at $42.96. The photo went viral on social media, causing many to accuse the company of price-gouging in the wake of the storm.

A Best Buy spokeswoman told CNBC the exorbitant pricing resulted from a “big mistake” made by a few employees at one store.

The company issued a statement Wednesday explaining that because it does not sell water by the case, its computer systems contain no pricing information for cases of water. When employees at the store in question failed to find prices for cases, they multiplied the price of individual bottles by the number of bottles in a case and arrived at the numbers listed above.

The statement says the explanation is not an excuse and expresses remorse for the occurrence.

“We feel terrible about this because, as a company we are focused on helping, not hurting people affected by this terrible event,” the statement says. “We are all deeply sorry that we gave anyone even the momentary impression that we were trying to take advantage of the situation.”

Best Buy is just one of a number of Houston-area retailers consumers have accused of using the storm to pad the bottom line, The Washington Post reports. The state attorney general’s office has received 684 complaints from consumers, most of which allege price-gouging.

“Anytime catastrophic storms hit Texas, we witness the courage of our first responders and the generosity of neighbors coming together to help their fellow Texas,” Attorney General Ken Paxton said in a statement, per the Post. “Unfortunately, in the wake of the damage from storms and flooding, we also see bad actors taking advantage of victims and their circumstances.”

Some businesses have charged as much as $8.50 for a single bottle of water, and up to $99 for a case, the Post says.

An investigation by KXAN, an NBC affiliate based in Austin, revealed that a Best Western hotel in Robstown was charging almost triple its ordinary nightly rate. A crew working undercover for the station paid $289.99 ($321.89 with tax) for a room that typically costs $119 per night.

Best Western spokeswoman Kelly Dalton said in a statement that the nationwide hotel chain had reimbursed the overcharged customers and intends to cut ties with the Robstown location.

One woman says she paid more than $60 for two cases of beer at a RaceWay gas station in Corpus Christi. RaceWay says the overcharge resulted from a clerical error, and that the owner, who is an “independent Raceway contract operator,” according to a statement by RaceWay, gave the customer a full refund when the mistake came to light.

Still, the company says: “We take these allegations seriously and are investigating them with the operator.”

Texas law enforcement takes price-gouging seriously as well. The offense carries a fine of $20,000 per incident. If victims are over the age of 65, the penalty is $250,000 per incident.

Price-gouging, Paxton says, is something “you can’t do in Texas.”

A few gas stations have reportedly been charging upwards of $3.50 per gallon for gas, Kayleigh Lovvorn, a spokeswoman for the attorney general’s office, told the Post. One store, she said, charged $20/gallon. The average gas price in Houston is $2.21, according to gaspricewatch.com.

Sunday, the Post reported that Harvey had forced the shutdown of a quarter of the oil and gas production in the Gulf of Mexico, and disabled ten percent (two million barrels per day worth) of the country’s refining capacity. The shutdowns will drive up the gas prices in and around Houston.

Paxton’s office is investigating whether the $20/gallon price was an act of price-gouging or a necessary response to the refinery shutdowns.

Featured Image via Flickr/brownpau