Good morning. High winds look set to add the destruction across Los Angeles. Stock and bond markets extend losses as investors trim bets on interest-rate cuts. And Apple cedes ground to Chinese rivals. Listen to the day’s top stories.

A firefighting helicopter drops water on hotspots during the Palisades Fire in Los Angeles. Photographer: Kyle Grillot/Bloomberg

LA is braced for more wildfires as Santa Ana winds return early this week, threatening to fan the flames that have already killed 24 people and destroyed more than 12,000 buildings. Millions of residents are left in peril and preparing for evacuation as the fires rage, with AccuWeather raising its estimate for damages and economic losses to as much as $275 billion. Click here for pictures of the disaster. 

In markets, it’s a sea of red. Stocks and bonds extended losses as traders slashed bets on Federal Reserve interest-rate cuts after Friday’s payroll data. Oil prices hit a five-month high as a fresh wave of US sanctions against Russia’s energy industry threatened to crimp supplies. For the dollar, the outlook is more optimistic. Goldman Sachs upgraded its forecast for the greenback for the second time in two months, expecting it to rally by about 5% over the coming year.

JPMorgan Chase’s Jamie Dimon is the latest to weigh in on tariffs. The CEO of the largest US bank said they can be a useful tool to address unfair competition and national security concerns if used properly, noting that Donald Trump is “a negotiator” who uses tough tactics. Canada’s outgoing PM Justin Trudeau chimed in, saying his country is ready with counter-tariffs if needed. Read our explainer on what Trump’s tariff push means for the economy.

China’s trade surplus soared to a record $992 billion last year as exporters rushed to make up for sluggish demand at home and get ahead of Trump’s return to the White House. Meanwhile, Goldman Sachs strategists are sticking to their bullish stance on Chinese stocks, predicting that benchmarks will rise about 20% by year-end.

Corporate news: Johnson & Johnson agreed to buy Intra-Cellular Therapies, which focuses on new treatments for mental health disorders and neurological conditions, for $14.6 billion. In the world of high finance, Steve Cohen’s Point72 Asset Management will return as much as $5 billion to investors after posting large profits, according to the Wall Street Journal.

Deep Dive: Apple’s AI Woes

Photographer: Chris Ratcliffe/Bloomberg

Playing catchup on artificial intelligence is costing Apple. It sold fewer iPhones and lost ground to Chinese rivals in the final quarter of last year, Counterpoint Research data show.

• Apple is rolling out its AI enhancements in stages after the launch of the iPhone 16, but those additions are not yet available in any form in China.
• That led to Android device-makers such as Xiaomi and Vivo to ramp up their offerings and grab market share.
• Apple shares are also taking a hit. The stock has lost more than 5% so far this year, weighed by its heavy reliance on China and risks such as a potential trade war under the Trump administration.
• Still, Apple plans an ambitious 2025 with a number of new products, major advances in its custom silicon and a fresh push into the smart home.

The Big Take

Opinion

America’s reliance on Saudi oil is nearing its endgame, Javier Blas writes. US imports of Saudi crude have plunged and the energy market is no longer a constraint on American foreign policy in the Middle East.

Before You Go

Photographer: Elsa/Getty Images

Getting mired in a scandal and dumped by Nike hasn’t stood in the way of NBA star Kyrie Irving remaining a presence in the shoe market. His new deal with Anta helped make the Chinese sportswear maker the fastest-growing sneaker brand on resale marketplace StockX in 2024.