Los Angeles' elite flee Palisades inferno

Good morning. Here's what happened overnight and what you need to know today.

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1.

Californian inferno: Fierce wildfires driven by hurricane-force winds are devastating Los Angeles, killing at least two people, destroying over 1,000 structures and prompting mandatory evacuations of more than 80,000 residents, officials said. The largest, in the Palisades area, has burned nearly 3,000 acres and forced at least 37,000 residents, including those in the affluent neighbourhoods of Pacific Palisades and Malibu, to flee. An Eaton fire near Pasadena has consumed over 2,200 acres, destroying homes, a synagogue and a nursing home, while another fire in the Hurst neighbourhood of Sylmar has burned 500 acres. With wind speeds exceeding 100 mph and all three major fires at 0% containment as of 7:30am Wednesday local time (2:00 am Thursday AEDT), firefighting efforts remained extremely challenging. A smaller blaze in Tyler Canyon, Coachella, prompted further evacuations, while a further fire in the Sepulveda Basin was contained, officials said. While Southern California wildfires typically occur in late spring to autumn, dry winters have made fires increasingly common year-round. “This is going to be devastating, a devastating loss, for all of Los Angeles,” said Traci Park, the Los Angeles city councilwoman representing Pacific Palisades. California Governor Gavin Newsom declared a state of emergency and secured federal grants to support the response. About 300,000 people were without power.(Capital Brief)(NYT)(Reuters)(NBC News)

2.

Claims plunge: US weekly jobless claims fell unexpectedly to 201,000 last week, the lowest in nearly a year, according to data from the Labor Department. The data – released early as federal offices and markets close on Thursday for a national day of mourning for former President Jimmy Carter – highlights a resilient labour market despite cooling from peak post-pandemic job growth. It precedes December’s jobs report, due Friday, and comes as Treasury yields rose on concerns over inflation and fiscal policy uncertainty. Meanwhile, CNN reported Donald Trump is considering declaring a national economic emergency as justification for universal tariffs on allies and adversaries.Treasury yields on 20-year bonds hit 5% for the first time since 2023, and 10-year yields rose to nearly 4.73%, shy of their highest since November 2023. Meanwhile, ahead of the release of the Fed’s December meeting minutes, Fed Governor Christopher Waller said he still believes inflation will continue its downward trend towards the Fed's 2% target, supporting further rate cuts in 2025. (Capital Brief)(Department of Labor)(Bloomberg)(Reuters)

3.

Power play: Constellation Energy is set to make power sector history with a potential USD30 billion ($48.31 billion) takeover of Calpine, which would be one of the largest deals ever in the industry, according to media reports. The deal, reportedly a cash-and-stock arrangement, comes amid a surge in US electricity demand, expected to rise 16% in five years due to AI data centres, new factories and increased electrification. Calpine, a major power producer with 78 facilities supplying electricity to 27 million homes, was taken private in 2017 for USD17 billion, including debt, by Energy Capital Partners, CPP Investments and Access Industries. Shares in Constellation, valued at over USD70 billion after doubling last year, fell between 7-11% on the news. Talks could still falter or lead to price adjustments, sources told financial news outlets. Neither company nor its equity partners provided comments. (WSJ)(Bloomberg)(FT)

4.

Felon fight: Facing potential sentencing as a convicted felon just days before returning to the White House, President-elect Donald Trump asked the US Supreme Court to block the proceedings. Trump was found guilty last year on 34 felony counts of falsifying business records to conceal a 2016 hush-money payment to adult-film star Stormy Daniels. His lawyers argue the presidential immunity granted by the Supreme Court should apply to presidents-elect and warn that sentencing could disrupt federal government operations. “The prospect of imposing sentence on President Trump just before he assumes office as the 47th president raises the specter of other possible restrictions on liberty, such as travel, reporting requirements, registration, probationary requirements and others — all of which would be constitutionally intolerable under the doctrine of presidential immunity,” they wrote. Prosecutors were ordered to reply by Thursday morning, suggesting the SC might rule before Friday’s scheduled sentencing.(Capital Brief)(NYT)(WSJ)

5.

Citi scepticism: Wall Street analysts are betting Citigroup will miss CEO Jane Fraser’s ambitious target to achieve an 11–12% return on tangible common equity by 2026, The Financial Times reported. They instead project a return of just over 9% next year, FactSet data shows, and some analysts warn Fraser may face replacement without visible progress. In comparison, rivals JPMorgan, Bank of America and Wells Fargo are forecast to hit double-digit returns of 17%, 15% and 14%, respectively, by 2026. Fraser’s sweeping overhaul since becoming CEO 4 years ago —including exiting 13 countries, flattening management and refocusing on core businesses—has yet to deliver the results needed to satisfy investors or analysts, the paper noted. Despite a 2023 share price jump of over a third, Citi’s stock trades at a 30% discount to book value, far below the 40% premium enjoyed by other large US banks in the KBW bank index. Citi’s Q4 2024 return is expected to be just 5.6% when it releases earnings next week. (FT)

6.

eBay’s marketplace: Meta will test integrating eBay listings into Facebook Marketplace in Germany, France and the US, allowing transactions to be completed on eBay. The move is in response to an EU antitrust ruling that fined Meta €798 million ($1.32 billion) in November for leveraging its dominance in social media to stifle competition in classified ads. eBay shares surged over 13% following the news, later trading 9.38% higher in the afternoon. Meta said the planned integration aims to address the European Commission’s concerns, adding it will appeal the ruling. The EU investigation, initiated in 2021, accused Meta of linking Facebook and Marketplace to disadvantage rivals and misusing advertising data. Elsewhere in Europe, the EU General Court ruled the European Commission must pay damages to a German citizen for failing to comply with its own data protection rules. (Meta)(WSJ)

7.

AI value: Augmented reality startup Infinite Reality said it secured USD3 billion ($4.84 billion) in funding valuing it at USD12.25 billion just six years after its founding in 2019. The company said the funding came from an unnamed private investor focused on global technology and real estate investments. “This transaction is in the form of pure equity, and no debt or restrictive covenants were made. The investor reviewed many opportunities, but ultimately bet on our vision, mission, strategy and team,” Amish Shah, co-founder and CEO said in a statement. The company previously attempted to go public via Newbury Street Acquisition, a special purpose acquisition company, but did not list, Reuters noted. Some of its notable past investors include Live Nation, T-Mobile Ventures, RSE Ventures and Lux Capital. (IR statement)(Reuters)

8.

Wallet fight: JPMorgan Chase has escalated its legal battle over Viva Wallet, filing two new lawsuits in Greece and the UK amid a €2 billion ($3.32 billion) valuation dispute with joint venture partner Werealize.com Ltd. The Greek case demands €916 million, accusing Viva Wallet CEO Haris Karonis and three executives of undermining JPMorgan’s 2022 investment. In the UK, the bank claims Werealize.com breached shareholder agreements. Karonis, who owns 51% of Viva Wallet while JPMorgan holds the rest and a buyout right, accused the bank of devaluing Viva, blocking its expansion and intimidating its directors. A UK judge in 2024 ordered a new valuation after disagreements over Viva Wallet’s worth. A JPMorgan spokesperson criticised Werealize.com for persistently breaching their agreements since the 2022 deal. (Bloomberg)