LA Faces High Winds as Fire Battle Continues; SEC Sues Elon Musk
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest on the Los Angeles wildfires. Crews from as far away as Canada are still struggling to contain the massive blazes that broke out eight days ago. Now, the same combination of high winds and low humidity that set them off in the first place is threatening the region again. L.A. Mayor Karen Bass says the next 24 to 48 hours will be critical. If you are told that you are in a warning zone...

it would be advised that you actually take that opportunity to leave. Get packed, get everything ready. Mayor Karen Bass says she's issued directives to help fast-track the rebuilding, but first, conditions on the ground need to improve. Palisades fire incident meteorologist Rich Thompson says they're getting there. Critical fire conditions, red flag warnings in effect until 6 p.m. Wednesday evening.

Now, by Wednesday evening, Wednesday night, I expect the critical conditions to diminish. And then for Thursday into the weekend, we'll actually get back to a more normal weather pattern here for this part of the country. As it stands now, the biggest fire in the Palisades is 18 percent contained. The Eaton Fire, which destroyed much of Altadena, is under 35 percent containment. The death toll remains at 24. Estimates of insured losses are running as high as $40 billion.

Well, Nathan, the fires are also threatening to make the Los Angeles housing crisis even worse. Before the fires, only about 5% of L.A. apartments were vacant with a median rent of $2,299. Now, more than 12,000 buildings have been destroyed, many of them homes. One rental company that manages some of L.A.'s priciest neighborhoods says...

is getting more than 10 times as many calls as it did before the fires. The firm recently arranged a 12-month lease for one tenant in Beverly Hills for $35,000 a month. After the fires, the owner raised the rent to $40,000.

Now to the latest on efforts for a truce in the Middle East. Israel and Hamas are now accusing one another of delaying a Gaza ceasefire aimed at exchanging hostages for prisoners and sending aid to the beleaguered Palestinian territory. While officials say an agreement for a six-week pause in fighting is still likely soon, frequent failures to get a deal finalized...

have left everyone saying nothing is being taken for granted. CBS News previously reported that Israel and Hamas have agreed in principle to a ceasefire. At the Atlantic Council, Secretary of State Antony Blinken said he thinks they're close. I believe we will get a ceasefire. And whether we get there in the remaining days of our administration or after January 20th,

I believe the deal will follow closely the terms of the agreement that President Biden put forward last May and our administration rallied the world behind. Secretary Blinken added the sides are discussing a pause to allow for the exchange of hostages and a boost in aid. During the truce, Israel and Hamas will start a second, more serious round of indirect negotiations about ending the war and rebuilding the territory.

Meanwhile, Nathan, in Washington, President-elect Donald Trump's pick for defense secretary, Pete Hegseth, appears on course to win confirmation after a half-day Senate hearing. Bloomberg's Amy Morris is in Washington and has more on the heated hearing. New York Democratic Senator Kirsten Gillibrand questioned Hegseth's position on women in the military. You will have to change how you see women to do this job well, and I don't know if you are capable of that.

And Virginia Democratic Senator Tim Kaine questioned Hegseth's character. You had just fathered a child two months before by a woman that was not your wife. Senate Armed Services Committee Chair Republican Roger Wicker of Mississippi showed his support for the nominee. I'm confident that Mr. Hegseth, supported by a team of experienced top officials, will get

the job done. Hegseth himself laid out his objective for the Pentagon if he's confirmed. When President Trump chose me for this position, the primary charge he gave me was to bring the warrior culture back to the Department of Defense. Hegseth does not need Democrats to win confirmation, but he can't lose more than three Republicans. In Washington, Amy Morris, Bloomberg Radio.

Amy, thanks. Turning to the economy now. A day after we learned U.S. wholesale inflation unexpectedly cooled in December, we get another reading this morning. Consumer prices are forecast to have risen four-tenths of one percent last month. Let's get a preview from Bloomberg's Michael McKee. The change in the consumer price index usually doesn't match the change in producer prices. So yesterday's surprisingly tame PPI report probably tells us very little about what we'll see today.

Investors and Fed officials will be watching housing costs in particular after housing inflation finally appeared to start cooling in November. If that continues, it's good news for the inflation outlook. Also under scrutiny, used cars, food and energy, and airline fares. Nothing but a huge miss, high or low, would get Fed officials to consider changing their plan to hold rates steady at their January meeting. Michael McKee, Bloomberg Radio.

All right, Michael, thank you. Well, on Wall Street, big bank earnings begin with Goldman Sachs, Citigroup, JPMorgan Chase and Wells Fargo this morning. We get more on what to expect from Goldman with Bloomberg Intelligence Senior Global Banks Analyst Alison Williams. Goldman Sachs, they may post the strongest EPS growth compared to

a year ago, as well as Morgan Stanley. Both of the banks are focused on the capital markets business, but Goldman is also benefiting from a honed focus. Much of the changes that they made last year have helped them sort of return to their core institutional strength, and we expect that they're going to show benefit from those trends, as well as momentum into the first quarter, especially for their leading exporters.

trading revenue, as well as the M&A business. Bloomberg Intelligence Senior Global Banks Analyst Allison Williams expects Goldman earnings at 7.30 a.m. Wall Street time. Well, Karen, Elon Musk is being sued by the Securities and Exchange Commission. The agency is accusing Musk of failing to timely disclose a major purchase of Twitter shares before he took over the social media platform. We get more from Bloomberg's Megan Howard.

The agency is alleging that Musk waited to disclose his acquisition of Twitter shares in order to build his position at lower prices. They are also saying that Musk deliberately ignored a deadline to publicly disclose that he acquired more than a 5% stake in the company early in 2022. And this is actually something that he had previewed in a letter last month. So the agency has officially filed that lawsuit in federal court as of today.

Bloomberg's Megan Howard says the SEC is seeking a civil penalty and for Musk to return profits made from his stock purchases. Well, Nathan, Elon Musk's space company, SpaceX, has had another landmark launch. Three, two, one, ignition.

A Falcon 9 rocket with a pair of commercial satellites on board took off from the Kennedy Space Center overnight. Both the satellites are carrying lunar rovers heading into the private sector moon race. One from Texas-based Firefly Aerospace is named Blue Ghost. It'll attempt a moon landing in 45 days. The other is owned by Tokyo's iSpace. The Hakuto-R probe will try for its second trip to the moon after a failed attempt last April.

Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's John Tucker. John, good morning. Yeah, good morning, Karen. New York Governor Kathy Hochul proposing a middle class tax cut. Let's get more on the story this morning from Bloomberg's Charlie Pellin. Word came in her state of the state address focusing on pocketbook concerns. First, I'm calling for a sweeping middle class tax cut.

Benefiting 8.3 million taxpayers making less than $323,000. The speech outlined a range of proposals aimed at reducing the cost of living in one of the most expensive states while expanding social services and reducing crime. In New York, Charlie Pellett, Bloomberg Radio. It was word this morning that Russia launched a massive aerial attack against Ukraine. The AP reports that forced Ukraine to introduce preventative power cuts in the middle of winter.

South Korean investigators arrested President Yoon Seok-yool today after launching a pre-dawn operation to bring the impeached leader in for questioning. This comes over his short-lived martial law declaration. And TikTok reportedly plans to shut off its app for U.S. users on Sunday. That's the day it will be banned unless the Supreme Court intervenes.

Well, the enormity of the destruction in Southern California has quickly snuffed out all festiveness in the movie industry's high season of celebration. The Oscars remain as scheduled, but it's certain they'll be transformed due to the wildfires. Some telethon-like element also seems sure to accompany the Oscars.

In recent days, many throughout the industry have voiced suggestions for how that broadcast could be reconsidered. Global News, 24 hours a day, whenever you want it, with Bloomberg News Now. I'm John Tucker, and this is Bloomberg. Karen. All right, John Tucker, thank you.

It's discipline. It's teamwork. It's the drive and passion inside of us that comes before all recognition. It's the best in each of us made better by the best in all of us. Whatever success looks like to you, Stiefel is invested in yours. That's why Stiefel is one of the fastest growing global wealth management firms in the country. So when you're ready to chase success, our financial advisors are ready for you. At Stiefel, we invest everything into our advisors so they can invest everything into their clients.

That means direct access to one of the industry's largest equity research franchises and a leading middle market investment bank. And it's why Stiefel has won the J.D. Power Award for Employee Advisor Satisfaction two years in a row. If you're an advisor or an investor, choose Stiefel, where success meets success. Stiefel Nicholas & Company, Inc., member SIPC and NYSE. For J.D. Power 2024 award information, visit jdpower.com slash awards. Compensation provided for using, not obtaining the award.

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Time now for the Bloomberg Sports Update, brought to you by Tri-State Audi. Here's John Stashower. John, good morning. Good morning, Karen. It was 40 years ago that St. John's in Georgetown played at the Garden, one of the most hyped college basketball games ever. They were ranked 1-2 in the country. The Hoyas won that game. They've hardly won.

The previous three seasons, a Big East record of 4-58, but they're much better this season. And at MSJ, Georgetown had a 14-point lead early in the second half. St. John's responded a 19-2 run to win 63-58. Coach of the Red Storm Rick Pitino was on NBC. When you don't have a great night, you come back and win. It tells you who you are and what you're all about. And these guys are about winning. And that's all that counts. They came out and said, don't worry about it. We'll

We're going to get it single digits. We'll win this game. St. John's now 15-3, 6-1 in the Big East. Auburn's ranked number one for just the second time ever. Tigers beat Mississippi State by 22. They're 16-1, third-ranked Duke. Now 17-2, beat Miami by 35. The Nets with just their fifth win since November, 132-114 in Portland. Knicks play tonight in Philadelphia. They may be without Carl Anthony Towns. He hurt his thumb in the game this past Monday. All three New York hockey teams lost tonight.

Rangers at Colorado, 3-2 in overtime. The Avs had tied the game in the minute 13 left. Islanders got shut out by Ottawa, 2-0. The Devils lost to Florida, 2-1 in the shootout. First place Capitals, 3-0 win over Anaheim Bruins, beat Tampa Bay, 6-2. Round two, the Australian Open saw a second straight four-set victory for the ten-time champion Novak Djokovic. Carlos Alcaraz lost only five games.

Straight set win for the women's top seed, Irina Sabalenka, as well as Jess Pagula and Coco Gauff. The second week of TGL, that's tomorrow's golf league, played indoors, some real, some simulated. Tiger Woods, one of the founders, and he played not all that well. Tigers team lost the 15-hole match 12-1. John Staschauer, Bloomberg Sports, Karen and Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. Another morning with little let up to the dangerous weather that has fueled the Los Angeles wildfires for more than a week now. Even more challenging conditions are in the forecast for today. And the warning from L.A. Mayor Karen Bass.

We are not out of this crisis yet. We still have another 24, 48 hours. And so, Angelenos, please be safe. Joining us now for the update, Bloomberg News Senior Editor Bill Ferry. So, Bill, where do things stand now? What kind of conditions are we expecting today? Good morning.

Good morning, Nathan. Yeah, there's really been no reprieve for residents of Los Angeles, Southern California or the firefighters out still battling these blazes with those Santa Ana winds continuing to gust up to 60 miles an hour. There were some new fires that started over the last day. Firefighters were largely able to contain or extinguish those.

But when you're talking about the two main fires, the Eaton fire, that's only 35 percent contained still. And the Palisades fire, even in worse shape, 18 percent contained. So a lot of work still ahead. There is some hope that humidity levels at least will be picking up.

in the week and maybe the winds dying down a little bit. That's important in terms of, you know, helping the vegetation not not become quite as dry. But there are already some concerns about whether winds might be picking up about a week from now when the weather conditions shift again. So still very tough time. You've got.

88,000 residents under evacuation orders and 2 million people in that region facing extreme fire conditions. Wow. And it sounds as though the resources that are being put to bear against these fires are really overwhelming now. Firefighters from as far away as Mexico and Canada. Is there still a question about whether there's enough resources going into this?

It seems to be less an issue of the resources than just the scale of what they're facing at this point. It's really the conditions are really not favorable to the firefighters at this point. They haven't been. You have these strong winds continuing to blow. Those can really fuel in those fires and keep them kind of moving along. So it seems to be less an issue of the resources

the resources, whether it's personnel or water, than just the kind of the huge conditions that they are up against at this point.

Just to shift gears, another major story I know you're following is this Securities and Exchange Commission lawsuit that Elon Musk is now facing over his disclosures ahead of the Twitter buyout. Is this the kind of case that we were expecting the SEC to make against Musk, given that he's really been under scrutiny for quite some time now?

Yeah, I mean, Musk did provide a hint of this in December when he released a letter he had received from the SEC. It's really hard to know whether this is kind of more of a symbolic parting shot by the outgoing Biden administration and the SEC chiefs.

or and whether or whether it will really have an impact. I mean, the crux of their argument is that Musk, when he was when he passed this five percent ownership threshold in Twitter in late March 2022, that he did not let the public let investors know as quickly as he should have that he was becoming a large stakeholder in the company.

In that time, when that information wasn't public, he continued to buy hundreds of millions of dollars in shares. If investors had known Elon Musk was there doing that, they probably would have gotten a higher price. That's what the SEC is saying, that investors were bilked of about $150 million. But whether that case is something that goes forward in the next administration when you have a new SEC chair, that's something we're going to have to wait and find out.

This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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