Los Angeles ablaze

Three wildfires are burning around Los Angeles—including one more powerful than any other to strike the region in recent history. The most destructive windstorm to hit the area in 14 years is fanning flames and smoke that have killed at least two people while incinerating homes and sending thousands seeking safety. Dangerous gusts are expected to persist for at least another two days, pushing flames through high-priced neighborhoods and hindering firefighters as the blazes burn out of control. The largest fire—known as the Palisades Fire—roared across 5,000 acres just west of Santa Monica Wednesday, destroying 1,000 structures. “It is plausible that the Palisades fire in particular will become the costliest fire on record, period—not just in California, but in general,” said Daniel Swain, a University of California Los Angeles climatologist. Swain said thousands of structures were likely to burn, including “some of the most expensive homes and buildings in the world.” —David E. Rovella

What You Need to Know Today

Those wildfires terrorizing Los Angeles have been like something out of a movie, Mark Gongloff writes in Bloomberg Opinion: vast, fast-moving, unpredictable and merciless. Their scope and nature have surprised even fire-jaded California, and are evidence of the consequences that can be expected as the planet continues to heat up. Consequences for which traditional risk-management tools—like, say, home insurance—are increasingly obsolete.

Bond market selloffs are pushing yields toward key thresholds, with the US 10-year Treasury touching 4.73% Wednesday, nearer to the 5% peak hit in 2023. In the UK, that yield rose to as much as 4.82%, the highest since 2008 and echoing the rout that ended Tory Liz Truss’s brief stint as prime minister two years ago. Even in Japan, once the world’s major holdout as central banks tightened monetary policy, the 10-year rate on government bonds has pushed over 1% to the highest in over a decade. Donald Trump’s election victory in the US has only stoked the shift, with uncertainty over his tariff threats and vows to push tax cuts through Congress as America’s ability to keep rolling over its monstrous debt—without paying a lot more to do so—comes under increasing doubt.

At least everyday Americans seem to be learning their lesson when it comes to debt. Outstanding US consumer debt actually fell in November by the most in over a year as credit-card balances plunged. Total credit dropped by $7.5 billion, according to Federal Reserve data released Wednesday. Credit-card and other revolving debt decreased $13.7 billion, the most since early in the pandemic, after surging a month earlier. Non-revolving credit, such as loans for vehicle purchases and school tuition, increased $6.2 billion.

President Joe Biden plans one additional round of restrictions on the export of artificial intelligence chips from the likes of Nvidia just days before leaving office, a final push in his effort to keep advanced technologies out of the hands of China and Russia. The US is said to seek a curb on the sale of AI chips used in data centers on both a country and company basis, with the goal of concentrating AI development in friendly nations and getting businesses around the world to align with American standards. A small number of US allies would maintain essentially unmitigated access to American chips while a group of adversaries would be effectively blocked. And the vast majority of the world would face limits on the total computing power that can go to one country.

Constellation Energy is said to be nearing an acquisition of Calpine in what would be one of the biggest-ever deals in the power generation sector. Baltimore-based Constellation is in discussions with Calpine’s private equity owners on a union that could be worth $30 billion. Founded in the 1980s, Calpine says it runs almost 80 facilities across 22 states and Canada. The company generates electricity from natural gas and geothermal resources that helps power roughly 27 million homes every year. After decades of flat US power demand, the need for electricity is skyrocketing thanks to data centers running artificial intelligence operations, new factories and the electrification of everything from cars to home heating.

Morgan Stanley promoted 173 employees to managing director, the firm’s top rank. New entrants to the club represent a 12% jump over last year, but still lower than in each of the two years before that. That marked a break from the trend seen at its rivals. The biggest US banks have been bulking up the number of new entrants to their highest ranks, reflecting the strong performance at the companies in recent years, as well as expectations for more robust business ahead. The largest Wall Street firms have all outperformed gains for broader stock gauges, with Morgan Stanley returning 40% last year.

What You’ll Need to Know Tomorrow

For Your Commute

Weather Watch Special Edition: Read this special edition of the Weather Watch newsletter, bringing you the latest on the wildfires around Los Angeles.

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