Bloomberg - Evening Briefing - Banning the non-compete

Bloomberg Evening Briefing

In a major victory for prospective employees looking down the barrel of a non-compete clause, the US Federal Trade Commission voted Tuesday to adopt a near-total ban on such provisions, which limit the ability of workers to switch jobs within an industry. The landmark decision comes three years after President Joe Biden signed an executive order encouraging the FTC to limit the employer-friendly restrictions, which constrain roughly one in five Americans. The agency’s three Democrats voted to strike down non-compete clauses while its two Republicans voted to keep them.

Federal Trade Commission Chair Lina Khan Photographer: Bloomberg

The ruling bans most new non-competes and means the bulk of existing restrictions would become unenforceable. The agency vote also bars non-competes for most senior executives, though existing limits on those who earn more than $151,164 a year in a “policy making position” can remain. The FTC estimated its decision would increase US employee earnings by at least $400 billion over the next 10 years. “Robbing people of their economic liberty also robs them of all sorts of other freedoms,” FTC Chair Lina Khan said. But while American workers may rejoice now, it’s not over yet. The ruling doesn’t take effect for six months, and business lobbyists vowed to challenge it in court. It’s a case that could eventually reach a Republican-appointee dominated Supreme Court that has made its views known when it comes to such agency action.  

Here are today’s top stories

A rally in tech heavyweights lifted the broader stock market Tuesday. In late hours, Tesla soared after the electric-vehicle giant did a bit of a U-turn, saying it will accelerate the launch of more affordable models after reporting worse-than-expected profit. The stock halted a seven-day plunge, climbing alongside other members of the “Magnificent Seven” cohort of megacaps. Equities had lost traction this month amid signals the Federal Reserve will hold rates higher for longer. The slide has in turn made stocks more attractive, with investors now focused on corporate earnings,  Citigroup strategists say. “We would view the recent pullback as a buying opportunity,” Mihir Tirodkar and Beata Manthey said. “The current earnings season could refocus investor attention on solid underlying fundamentals.”

Texas Instruments gave a bullish revenue forecast for the current quarter, indicating that a slump in demand for industrial and automotive components may be easing. The report suggests that customers have begun to resume ordering chips after working through stockpiles of components. Texas Instruments, which has the broadest customer base among chipmakers, serves as a bellwether for confidence in the US economy.

The first witness in the first criminal trial of Donald Trump provided testimony that echoed central allegations leveled by the New York grand jury that indicted him. The former head of the company that owned the National Enquirer testified how he killed stories about Trump’s extramarital affairs to boost his 2016 presidential campaign—that he agreed to use his tabloids and magazines to support Trump and punish his rivals. David Pecker described the frantic efforts to “catch and kill” the story of a former Playboy Playmate, Karen McDougal, who said she had an affair with Trump.

Donald Trump at Manhattan criminal court on Tuesday Photographer: Yuki Iwamura/AP Photo

Rubrik, a cloud and data security startup backed by Microsoft, is said to have drawn about 20 times as many orders for its planned initial public offering as there are available shares. Rubrik is set to raise as much as
$713 million in the first-time share sale, based on its filings with the US Securities and Exchange Commission.

Apple’s iPhone sales in China fell 19%, the gadget’s worst performance there since Covid struck. The US company dropped to third in the hotly contested market, roughly on par with fast-rising rival Huawei, which climbed almost 70%. The market as a whole expanded about 1.5% as local brands including Honor Device and Xiaomi led growth. The iPhone’s weakness is remarkable in part because the first quarter, when China celebrates the Lunar New Year, is traditionally a period of heightened consumption.

Boeing has more trouble on its hands. The embattled planemaker’s plan to buy back supplier Spirit AeroSystems has become mired in protracted discussions over pricing for factories that make components for Airbus, complicating Boeing’s efforts to gain tighter control over manufacturing quality amid a series of lapses and US scrutiny.

The bad news for American workers is that most will need to work longer. The good news is that, if they do it right, most will want to. Retiring at 65 or even 67 isn’t realistic for most people’s finances—or the government for that matter, Allison Schrager writes in Bloomberg Opinion. So both the public and politicians need to give up on the idea that each successive generation is entitled to a longer retirement. Instead, Schrager writes, the US needs to rethink not only the labor market but also the concept of work. In the new economy, many Americans will work well into their 70s.

Photographer: Christopher Furlong/Getty Images Europe

What you’ll need to know tomorrow

A Dark Horse Emerges in the EV Race 

The fight among electric carmakers in a narrowing field of buyers may have a new contender. “We were just looking to try something different,” says Gary Roberts, a retired dentist who lives near Asheville, North Carolina. “I don’t like the way the Teslas look, and this looks way better than the BMWs and Audis and even the Mercedes.” Roberts bought a Cadillac. Even as the shine wears off much of the EV space, Cadillac’s Lyriq has emerged as a rising star. General Motors sold almost 6,000 of them in the first quarter, besting almost all of its German luxury rivals.

The Cadillac LYRIQ  Courtesy of Cadillac

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