What's next for Los Angeles?
Angelenos can't take a day off. Homes and businesses from Ventura to San Diego County are on high alert as dangerous winds are expected to push into Southern California, even as wildfires continue to rage around Los Angeles.
It is certain that rebuilding once the fire is finally extinguished will be extremely expensive. But officials will face significant pressure on where to prioritize spending to revive the economy. Governor Gavin Newsom signed an executive order to accelerate housing rebuilding and prevent price gouging.
But difficult questions remain about the future of more ambitious efforts. For example, can the city meet its obligation to host the 2028 Summer Olympics, or next year's World Cup event?
Hosting the Olympics is even more expensive. LA28, a private organization supporting the Games, has set a budget of approximately $7 billion. If there are cost overruns, taxpayers will be left in the lurch. These obligations have led some, including conservative commentator Charlie Kirk, to call for Los Angeles to leave now.
The Olympics have a history of being a drag on host cities' economies. But last year's host, Paris, reversed this trend with a budget surplus of about $28 million. And the hugely successful 1984 Los Angeles Olympics is still considered an economic model.
But there are also many dangers. International Olympic Committee rules stipulate that host cities must be able to accommodate an influx of athletes and fans from around the world. The site of the Olympic Village, the University of California campus, is not far from the Pacific Palisades fires. So is Riviera Country Club, another venue where the golf competition is scheduled to be held.
If the city is not ready, the Olympics could be canceled. “They might go back to Paris,” Pennsylvania State University professor Mark Dyreson suggested to the New York Post. Another Olympic historian thought it was likely that the event was moved to another part of the region.
Newsom says such talk is premature. Democrats, who are under severe pressure over the state's handling of the crisis, told NBC News on Sunday that the city could rebuild and still host the Olympics. “We already have a Marshall Plan organized and we already have a team reimagining LA 2.0,” he said.
what's happening here
President Biden has delayed enforcement of an order blocking Nippon Steel from doing business with U.S. Steel. The move sets the executive order's effective date as June 18, the acquisition deadline, and gives the court time to consider legal challenges by both companies.
Steve Bannon's feud with Elon Musk intensifies. Mr. Bannon, a longtime ally of President Trump, told Italian daily Corriere della Sera over the weekend that he believed the tech mogul was a “really evil man, a very bad man” and said he believed Tesla said he would do anything to deny top officials access to all information. White House. The comments highlight a growing rift between Musk and traditional right-wing Trump supporters, who have clashed over issues such as visas for skilled workers.
Jeff Bezos' Blue Origin thwarts a highly anticipated rocket launch. The company postponed the New Glenn rocket's orbit entry on Monday after several delays, citing an unspecified “vehicle subsystem issue.” Blue Origin has a lot going for it. New Glenn is the company's latest effort to catch up with Elon Musk's SpaceX in the space race, but Bezos' startup didn't want to risk an accident.
Ackman's latest plan to build a new Berkshire Hathaway
Bill Ackman cannot be accused of thinking small. His recent big deal shows why.
The billionaire hedge fund manager announced Monday that his Pershing Square firm will make a bid to buy about 62% of real estate company Howard Hughes Holdings that it doesn't own for $85 a share. . But the bigger news is that if a deal is reached, Ackman hopes to turn Howard Hughes into a public vehicle for acquiring other companies and turn himself into a Warren Buffett-style investor. It's about being there.
“With all due respect to Mr. Buffett, HHH will be the modern-day Berkshire Hathaway.” Mr. Ackman wrote in an open letter to Howard Hughes shareholders. Here's how it works:
-
Pershing Square Holdco, the parent company of Mr. Ackman's hedge fund, plans to create a new subsidiary to acquire and hold Howard Hughes Co., which has assets such as office buildings and planned communities. Mr. Pershing intends to own the real estate business “forever.”
-
Mr. Ackman believes Howard Hughes will soon begin to generate “significant excess cash resources.” That capital, combined with Pershing's ability to find profitable investments, could be used to buy entire companies and other assets, similar to how Berkshire Hathaway uses its vast cash from its insurance division to make deals. It may be possible to use it to
Ackman believes this deal sets the stage for the next era for Pershing. He rose to fame and fortune as a prominent activist investor, minting billions more by placing favorable bets to hedge against the pandemic and inflation.
Since then, he has focused on raising what he calls “permanent capital” through closed-end funds traded on the London Stock Exchange. He tried to raise an even bigger sum in New York last year, but abandoned the plan, which he hoped would be used to make big bets like Mr. Buffett.
One question: What does Ackman see in Howard Hughes? He led its creation 15 years ago through a spinoff from bankruptcy real estate giant General Growth Properties.
But since then, Howard Hughes' stock price has fluctuated wildly, falling 10% in the past 12 months alone amid volatile earnings. Unusually, Ackman said he has no intention of changing the company's operating plan or business plan.
What kind of economy is President Trump inheriting?
By many measures, the economy looks strong. But President Trump's trade rally appears to be on shaky ground.
The decline in stocks and bonds has some investors worried that the Fed will stop cutting interest rates and that rising borrowing costs will weigh on President Donald Trump's economic policies. There is.
latest: The S&P 500 is down more than 4% from its post-election day high, and futures markets are signaling another rough rally on Monday. The dollar is rising again, and so is oil.
What does this mean for President Trump's plans? The president-elect is inheriting a red-hot economy, as Friday's big jobs report showed. However, if that happens, the government could be in trouble. Will he be able to deliver on his pledges to cut taxes and impose tariffs on trading partners to boost growth, or should he focus on stemming a resurgence in inflation?
Look at this week's data. Fed officials will be closely watching Wednesday's consumer price index report and Thursday's retail sales data for clues about inflation and how it might affect the interest rate outlook.
Separately, market players are closely monitoring the yield on the 10-year Treasury note, which influences interest rates on mortgages and other consumer loans. It has been rising in recent months even as the Fed lowered its benchmark interest rate. (The yield was just below 4.8% on Monday.) This is unusual and could reduce demand for additional loans.
Traders and Wall Street continue to reduce the likelihood of future rate cuts. This morning's futures market predicted just one rate cut this year, but economists at RBC Capital Markets currently don't see any cuts.
Can corporate profits lift the dark clouds? Expectations for the earnings season are quite high. The solid performance of Big Tech companies in particular has driven the bull market of the past two years. But amid growing economic uncertainty, some on Wall Street are beginning to readjust their forecasts.
RBC Capital Markets' worst-case forecast is that corporate profit growth has peaked. Lori Carbasina, the bank's head of U.S. equity strategy, said in a letter to clients this morning that the S&P 500 could end the year at around 6,200, about 6 percent below its annual target.
On deck: JPMorgan Chase, Goldman Sachs, Wells Fargo and BlackRock will report their full-year results on Wednesday. Morgan Stanley and Bank of America will exit Thursday.
–China's trade surplus hit a record high last year. Rapidly rising to nearly $1 trillion According to official data released this morning, as a manufacturer expedite shipping of products before President-elect Donald Trump takes office next week. But the data also reveals that imports of factory goods have slowed sharply, pointing to the impact of weak Chinese consumption and the Chinese government's push to ramp up production of domestic goods.
US sides with Musk on OpenAI debate
As OpenAI prepares for a charm offensive in Washington this month, federal regulators are backing Elon Musk in part of the legal attack on the artificial intelligence giant.
The Justice Department and the Federal Trade Commission said in a court filing Friday that Musk's law concerns whether OpenAI and Microsoft share a board seat that includes billionaire venture capitalist Reid Hoffman. I wrote that I support the claim.
Although they did not take a formal position on the overall battle, the move hints at how the interpretation of antitrust enforcement that began under President Biden may continue under the Trump administration. I am doing it.
TL;DR: Musk has waged war against OpenAI, which he helped found, and the company's efforts to shed its nonprofit status. (OpenAI denies Musk's claims and says Musk wants to harm its xAI competitors.)
In November, Mr. Musk added new allegations about Mr. Hoffman and Microsoft Vice President Dee Templeton to the lawsuit. The illegality of this situation (known as interlocking the board's role) continued even after the board's role was determined. He has resigned from his position as director, he claimed.
Department of Justice and FTC Supported Musk's legal interpretation, It argues that simply forcing a director to resign is “not sufficient to contest the claim.”
Regulators have focused on interlocking authorities in recent years. The Justice Department has forced executives at Warner Bros. Discovery, Pinterest and other companies to resign over the issue. However, since these matters generally never end up in court, the company has rarely, if ever, filed a statement of interest with the interlocking board.
The filing could also signal the possibility of further extensive scrutiny. In a footnote, the Department of Justice and FTC question whether the relationship between Microsoft and OpenAI constitutes an “unregulated merger,” and do not take a position on this view “at this time.”
consider that politics is involved. The filing provides a point of reconciliation between Mr. Musk and the FTC, despite clashes between the two under outgoing Commissioner Lina Khan. (Interestingly, Hoffman, a major Democratic donor, publicly advocated for Khan's ouster during the presidential campaign.)
The filing raises questions about how the FTC will approach antitrust law under President-elect Donald Trump's pick to lead the regulator, Andrew Ferguson.
speed reading
Great deals
politics and policy
-
Trump Cabinet picks news: Scott Bessent, President-elect Donald Trump's nominee for Treasury secretary, said he would sell assets to avoid conflicts of interest. And how Sen. Marco Rubio's attack on Tesla complicates his chances of becoming Secretary of State. (New York Times, Wapo)
-
Rohit Chopra, the outgoing director of the Consumer Financial Protection Bureau, warned that the boom in artificial intelligence could lead to more intrusive surveillance. (“Washington AI Network with Tammy Haddad”)
the best of the rest
We welcome your feedback. Email your comments and suggestions to dealbook@nytimes.com.
