Los Angeles fire damage amount

catastrophic damage

More areas in the Los Angeles area are on fire Thursday as a new wildfire breaks out in the Hollywood Hills and firefighters work to extinguish other wildfires, including the 17,200-acre Palisades Fire. . Significant fire conditions are expected to continue for at least another day.

The fire is already the most destructive in Los Angeles history. At least five people have been killed, and estimates of the economic devastation are steadily reaching billions of dollars, including damage to homes, landmarks, and the film and television industry. And California's insurance market, already battered by waves of climate change, is taking another hit.

Latest damage estimates: AccuWeather estimated Wednesday that the economic cost could reach up to $57 billion. This is more than three times forecasters' estimates for the 2023 Hawaii wildfires ($14 billion to $16 billion), but lower than the 2020 West Coast wildfires ($130 billion to $150 billion).

California wildfires have burned more than 27,000 acres, including parts of the upscale Pacific Palisades area, where the median home price is about $2 million. Shares of Edison International, the parent company of the power company serving the Los Angeles area, fell 10% Wednesday. The cause of the fire is unknown, but investors appear concerned about potential legal liability that could cost other power companies billions of dollars in settlements related to other wildfires.

California's insurance market is facing an existential challenge. The state was already working to stop insurers from fleeing after fires in 2017 and 2018 wiped out a quarter-century of insurance company profits. Recent fires could accelerate that runoff, further increasing the already rising incidence.

More than 100,000 Californians lost their insurance policies between 2019 and 2024, and State Farm, one of the state's largest insurers, lost 70% of its customers in and around the Santa Monica Mountains last summer.

This has led homeowners to take advantage of the California Fair plan. The program is essentially a state-backed program of last resort for homeowners who cannot afford private insurance. If the plan needs additional funding, private insurance companies operating in the state can cover the difference. But that could result in higher tax rates across the state.

Parts of Hollywood are at a standstill. Glorious events such as Oscar nominations, the Critics Choice Awards, and several film premieres have been canceled or postponed. More importantly, industry-wide production on some of the region's biggest shows, including TV shows “Grey's Anatomy,” “NCIS,” “The Price is Right” and “Jimmy Kimmel Live!” was closed.

Disney closed its headquarters in Burbank, and NBCUniversal closed its Universal Studios Hollywood theme park.

what's happening here

The Biden administration is planning new export controls related to artificial intelligence. The rules, which could take effect as early as Friday, would limit where AI chip makers can ship their cutting-edge technology and where they can build AI data centers. More than 20 enemy countries, including China, have been placed on the block list, increasing tensions between the US and China.

Longshoremen have reached a tentative agreement to avoid a large-scale strike. Their union, the International Longshoremen's Association, reached an agreement with the American Maritime Union on Wednesday for the future use of automatic machines at East Coast and Gulf Coast ports. Both teams were facing a Jan. 15 deadline. In other labor news, the Service Employees International Union, which represents nearly 2 million workers, agrees to work with the AFL-CIO to end ski patrol strike at resort in Park City, Utah A collective bargaining agreement is scheduled to be concluded.

Constellation Energy is reportedly nearing an agreement to acquire Calpine. The deal is expected to value Calpine at about $30 billion, including debt, and would be the largest in the power generation industry, according to Bloomberg. The utility sector has soared over the past year as data center power demand is expected to soar in the coming years.

Tickets for President Donald Trump's inaugural committee are sold out. The Times reports that the president-elect's team has told major donors that they will no longer provide access to President Trump's swearing-in and some related events after donations exceeded $170 million. It is said that (Some billionaires are on waiting lists.) The restrictions are in part a response to the rush of deep-pocketed donors and corporations to curry favor with President Trump. It reflects.

Global bond anxiety

Major U.S. stock exchanges will be closed Thursday as part of a national day of remembrance for former President Jimmy Carter. But the bond market is open, and it is sounding alarm bells around the world.

The worry is that a steady sell-off in U.S. Treasuries could tie the Fed and President-elect Donald Trump's hands. That clouds prospects for rate cuts and the administration's plans to boost economic growth through tax cuts and other measures.

What's new: The dollar is strengthening, and so are concerns about rising financing costs. U.S. Treasuries and government bonds fell on concerns about a return to inflation. Minutes of the latest Fed policy meeting released Wednesday showed that some officials said President Trump's plans to tighten immigration and tariffs could push up consumer prices and force the central bank to halt interest rate cuts. It was shown that he was concerned.

Another unhelpful development: Elon Musk appears to be scaling back hopes for a $2 trillion government spending cut plan championed by some deficit hawks.

Still, Fed Chairman Christopher Waller said he was not convinced that tariffs would meaningfully boost inflation and reiterated that “further rate cuts are appropriate.”

That did little to reassure investors. Traders this morning predicted just one rate cut this year, compared to the Fed's own forecast of about two. And the combination of rising sovereign bond yields and central bank interest rate cuts spread bond unrest around the world, effectively undermining the authorities' efforts.

The last time yields rose to this high was in 2022 and 2023, when global stock prices fell. At least this time the global economy is growing and the risk of infection has been reduced. Still, the S&P 500 is down nearly 3% from its all-time high reached on Dec. 6.

Look at England. Concerns about public finances due to rising inflation have caused the pound to fall and 30-year bond yields to rise to levels last seen in 1998. Memories are coming back to September 2022, when the debt crisis led to the resignation of Prime Minister Liz Truss.

Currently, the country's fiscal situation is improving. But the meltdown highlights the challenges facing current Prime Minister Keir Starmer, who could face increasing political pressure from Musk and his allies, according to the Financial Times. It is reported that there is sex.

Behind the advertising industry's silence on meta

Among those who loudly protested Meta's plans to overhaul its content policies, including eliminating its fact-checking program, one group was conspicuously absent. It was a major advertiser.

This reflects Meta's dominance in digital advertising, and with rival TikTok likely to be banned in the US, these companies have little power to resist. And the industry is already licking its wounds after a bitter battle with Elon Musk and Republicans.

Meta dominates when it comes to advertising, accounting for about 45% of the market last year, according to analytics firm Sensor Tower. (Google accounts for much of the rest.) Brian Wieser, a veteran industry executive who runs consulting firm Madison & Wall, said that dominance has shifted the center of power in the conversation about ad spending from advertisers to digital. He said he leaned toward the platform.

Marketers were right that Mark Zuckerberg did not mention them when announcing his company's change in direction, suggesting that Meta's CEO was making the bombshell from a position of strength. “None of them will make a big deal about it,” Wieser told Dealbook's Bernhard Werner of Mehta's changes.

The meta could become even more powerful. Sensor Tower predicted that Zuckerberg's tech giant could gain market share this year if it introduces advertising on its Threads social network, as some have predicted.

More importantly, TikTok could be banned in the US this month. TikTok has been a fast-growing business for advertisers, with Wieser estimating it pulled in $8 billion in U.S. ad sales last year, but it's already seen some marketers shift their spending to Instagram. He also owns Instagram. Meta.

Clashes with Musk and Republican lawmakers have also taken a toll. The Global Alliance for Responsible Media, a nonprofit organization that includes some of the world's biggest advertisers, dissolved last year after tech moguls filed a lawsuit.

Musk had accused the organization of organizing an illegal boycott after recommending that major brands suspend spending on X after Musk's acquisition. (This comes as Ohio Rep. Jim Jordan, the Republican chairman of the House Judiciary Committee, is investigating whether the group, known as GARM, is involved in an illegal conspiracy to destroy conservative media. That was after it started.)

That's why marketers have become reluctant to speak out against platforms. “If you say you don't want your ads to run alongside hateful content, you're making a political statement,” Wieser told DealBook.

That said, Meta appears to have taken some steps to allay advertiser concerns. Nicola Mendelsohn, head of Meta's top advertiser relations, wrote on LinkedIn that brand safety remains a priority. Even before Tuesday's announcement, Meta reportedly proposed to its biggest advertising partners to tighten their moderation processes, according to the Financial Times.

speed reading

Great deals

Blackstone has agreed to invest in DDN, a data management company for artificial intelligence applications, at a valuation of $5 billion. (WSJ)

With TikTok's future still up in the air, a group of investors led by billionaire Frank McCourt's Project Liberty has formally submitted a takeover offer for TikTok's U.S. operations. (Project Liberty)

“The Return of Dan Loeb” (Institutional Investor)

politics and policy

the best of the rest

A company controlled by Saudi Arabia's sovereign wealth fund is nearing an agreement to partner with TKO, the parent company of Ultimate Fighting Championship, to create a boxing league. (New York Times)

An open letter from outgoing US Surgeon General Vivek Murthy urges Americans to “rethink how we live our lives.” (people)

Elon Musk says he is currently one of the world's top Diablo IV players. Other gamers ask how the head of six companies and prolific social media poster finds the time. (WSJ)

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