The daily business briefing: May 22, 2018
The Supreme Court sides with employers over workers on arbitration, Consumer Reports won't recommend Tesla's Model 3, and more
Supreme Court rules employers can force arbitration
The Supreme Court on Monday upheld the right of companies to make workers sign arbitration contracts preventing them from joining together in class-action lawsuits seeking better pay and work conditions. Justice Neil Gorsuch, writing for the conservative 5-4 majority, said that it was "clear" that the contracts are valid under federal law encouraging arbitration over litigation. Justice Ruth Bader Ginsburg, reading her dissent from the bench in a sign of strong opposition, called the majority opinion "egregiously wrong," saying it would lead to "huge underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers," and force millions of workers into "arm-twisted, take-it-or-leave-it contracts." She urged Congress to address the issue to protect workers.
Consumer Reports says it can't recommend the Tesla Model 3
Consumer Reports said Monday that the Tesla Model 3 had failed to earn its recommendation. CR said the Model 3, the electric car maker's first mass market vehicle, had "flaws — big flaws" with its braking distance. In Consumer Reports' tests, the Model 3 stopped in 152 feet from a speed of 60 mph, which was "far worse than any contemporary car" the company has tested. Tesla said the Model 3, which is critical to the company's plans for profitability, brakes faster than Consumer Reports claimed. In internal tests, the Model 3's average braking distance was 133 feet. The reviewers also said they found the car's touch-screen control panel distracting, and that the Model 3 offered a "stiff ride, unsupportive rear seat, and excessive wind noise at highway speeds."
Sony reaches deal to buy control of music publisher EMI
Sony Corp. said Tuesday that it would buy control of the world's largest music publisher, EMI, for $2.3 billion. It is the biggest strategic deal yet for Sony's new CEO, Kenichiro Yoshida. It gives Sony a catalog of more than 2 million songs by artists including Kanye West, Sam Smith, and Sia, just as streaming services are reviving the prospects of the music industry. Yoshida is following up his predecessor's shift away from low-margin consumer electronics by focusing on creating reliable revenue streams from entertainment content. "This investment in content intellectual property is a key stepping stone for our long-term growth," Yoshida said.
Stocks rise as U.S.-China trade tensions ease
The Dow Jones Industrial Average rose by 1.2 percent on Monday, closing above the 25,000 level as investors reacted to easing U.S.-China trade tensions. The S&P 500 rose by 0.7 percent to its highest close since March 12. The Nasdaq Composite gained 0.5 percent. The Dow was poised for further gains early Tuesday, with Dow futures up by 0.2 percent. Futures for the S&P 500 and the Nasdaq-100 were up by 0.4 percent. With no fresh economic data coming out during the day, fading trade-war fears are expected to remain in focus. Ford Motor shares rose by 1.6 percent pre-market after China announced that it would reduce import duties on cars to 15 percent from 25 percent starting July 1.
Andy Warhol-founded Interview magazine folds
Interview magazine, founded by Andy Warhol in 1969, is shutting down, several staff members confirmed Monday. The magazine featured celebrities interviewing one another, and covered art, entertainment, pop culture, and fashion. Editor Ezra Marcus told CNN Money that the magazine is "folding both web and print effective immediately," with employees finding out during a meeting that the company is filing for bankruptcy. In 1989, billionaire Peter Brant purchased Interview from Warhol's estate. The past several months were tumultuous for the magazine, with its former editorial director suing for back pay and the fashion director resigning after being accused of sexual misconduct.