FDIC board meeting Tuesday … Senate Banking Committee stablecoin hearing Tuesday … Treasury Department Freedman’s Bank forum Tuesday …Bipartisan Policy Center virtual discussion on housing supply Tuesday … Center for American Progress and Sierra Club virtual discussion on “Wall Street’s Carbon Bubble” Tuesday. Federal Open Market Committee meeting Tuesday and Wednesday … November retail sales data released Wednesday … Senate Banking disaster recovery aid hearing Wednesday … November housing starts data released Thursday … Financial Stability Oversight Council meeting Friday. INFLATION WATCH — SOARING INFLATION COULD HAMPER BIDEN’S BID TO NARROW WEALTH, RACIAL DISPARITIES — Our Eleanor Muller: “Rising prices have historically squeezed workers with lower incomes more than their higher-paid counterparts, particularly during economic downturns — not only because workers with lower incomes have less wealth to fall back on, but because the goods they purchase most increase more in price, and they are less able to seek out lower-priced substitutes.” — Latest inflation data: Here’s our Ben White on Friday’s November CPI report showing 12-month prices up 6.8 percent. As Ben notes, the latest data could fuel Republican criticism of Biden’s economic performance – a key factor in the 2022 mid-term elections – and embolden conservative Democrats such as Sen. Joe Manchin of West Virginia to oppose the president’s $1.7 trillion Build Back Better package, which the party hopes will clear the Senate by Christmas. — White House slams meat processors: We told you Friday to expect to hear more from the administration and lawmakers about big corporations’ role in rising prices. In a blog post after the CPI report , White House officials noted that meat prices are still the largest contributor to rising grocery bills, while profit margins for the biggest meat-processing companies have skyrocketed since the pandemic. “The meat price increases we are seeing are not just the natural consequences of supply and demand in a free market—they are also the result of corporate decisions to take advantage of their market power in an uncompetitive market, to the detriment of consumers, farmers and ranchers, and our economy.” — Yellen to Hill: Ignore inflation data, BBB alternative cost estimates: Meanwhile, our colleague Laura Barron-Lopez obtained a memo from Treasury Secretary Janet Yellen to the Hill Thursday night urging Democratic lawmakers not to be spooked by Friday’s inflation numbers and a new analysis of President Joe Biden’s social spending bill designed to portray it as exceedingly costly. WYDEN UNVEILS REVISED RECONCILIATION TAX PLAN — Our Brian Faler: “The Senate’s top tax writer is offering companies with pensions special protections from Democrats’ proposed ‘book income’ minimum tax on large corporations. “In a revised draft released Saturday, Finance Chair Ron Wyden (D-Ore.) also proposed easing limitations on corporate interest deductions that Democrats want to use to help finance their next big legislative package. … Wyden is also dropping a planned tax on vaping; making changes to a number of energy tax credits; and correcting technical snafus in a House-passed version of the measure.” BIDEN ORDERS END TO U.S. OVERSEAS FOSSIL FUEL FINANCE — Our Zack Colman: “President Joe Biden is ending federal financial support for most overseas fossil fuel projects, as part of the administration's effort to put its weight behind deploying more clean energy abroad to combat climate change. The new U.S. policy position was announced in a diplomatic cable sent to U.S. embassies last week that was obtained by POLITICO on Friday. The policy covers future fossil fuel projects, and excludes those that have already received approval from U.S. agencies or finance institutions.” FED SCOLDS BIG BANKS IN WAKE OF ARCHEGOS MELTDOWN — Victoria again: “The Federal Reserve on Friday sent a warning to large banks in the wake of the collapse of overleveraged investment fund Archegos Capital Management and urged them to get complete and verified information on any similar clients in the future. … The Fed told banks that, when initiating a relationship with an investment fund, they should gather information on “the fund’s strategy, concentrations and relationships with other market participants.” FIRST LOOK: TREASURY URGES FEDS TO USE MINORITY BANKS — Deputy Treasury Secretary Wally Adeyemo is asking his counterparts at other federal agencies to consider using participants in Treasury’s Minority Bank Deposit Program for their banking needs, according to a letter sent Friday and obtained by MM. The program includes minority- and women-owned firms and credit unions in underserved communities. The move is part of Treasury’s effort to promote supplier diversity, and comes as the agency is hosting its annual Freedman’s Bank forum this week. IT’S FED WEEK — INFLATION SURGE PUSHES REAL RATES INTO MORE DEEPLY NEGATIVE TERRITORY – WSJ’s Nick Timiraos: “This year’s inflation surge has had a sometimes overlooked side effect: It means the Federal Reserve’s interest-rate policy is providing even more fuel to a hot economy. The Fed influences borrowing costs by controlling a short-term lending rate, called the federal-funds rate. To stimulate the economy, it has held the rate near zero since March 2020, when the coronavirus pandemic hit. “But in economic models, it is the inflation-adjusted — or ‘real’ — interest rate that matters most, because inflation reduces the value of future repayments. The real rate ‘is arguably the most fundamental indicator of the stance of monetary policy,’ wrote economists Christina Romer and David Romer in a 2004 paper.” FED’S ECONOMY EXPERIMENT OFFERS HISTORIC BET ON SOFT LANDING FROM HIGH PRICES — Reuters’ Howard Schneider: “The U.S. Federal Reserve's experiment with running a ‘hot’ economy has edged into historically uncharted territory, with an unemployment rate never reached without associated central bank rate increases and now levels of inflation that in the past also prompted a policy response.” EL-ERIAN: TRANSITORY INFLATION CALL LIKELY FED’S WORST EVER — Bloomberg’s Eric Martin: “Allianz SE’s Mohamed El-Erian said the Federal Reserve needs to move fast to regain control of the inflation narrative, denouncing Chairman Jerome Powell’s prior assurance that price increases are short-term.” | 
