| | | | |  | | By Sam Sutton | | Presented by |  | | | Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.
| | Donald Trump made a meal over surging egg prices throughout the 2024 presidential campaign. Now, he’s going to have to eat it. Egg prices are soaring as U.S. farmers grapple with avian flu outbreaks that killed a record number of chickens in the final months of 2024. Inventories remain depleted, particularly after demand spiked over the holiday season, and “supply remains the greatest challenge in the marketplace,” the USDA reported this month. Those forces pushed the market intelligence firm Urner Barry’s widely cited egg index to a high of nearly $5 per dozen as of Monday afternoon. Omair Sharif, the president of Inflation Insights, said in a note to clients that egg prices are likely to be “the biggest source of strength” for food inflation when the Labor Department reports the Consumer Price Index for December on Wednesday. (We’ll get a preview when Labor releases its Producer Price Index report — which includes data on the wholesale price of eggs — later this morning). And there are few signs suggesting bird flu (H5N1) outbreaks that have weakened the nation’s poultry supply — as well as dairy and pork herds, and their workforces — will fade anytime soon. In six days, Trump will have to reckon with those problems. There aren’t many levers he can pull to quickly resolve them. “There were a lot of people who decided to support Trump because they experienced price increases under a Democratic administration, and [they] thought that there was something that Trump might be able to do to bring them down,” Bharat Ramamurti, who was a deputy director of the National Economic Council under Biden, told MM. “The truth of the matter is that it's quite hard — when you're dealing with supply-side driven price increases — for the government to do something that provides short-term relief.” Trump has already begun to downplay what his second administration can do to bring down food prices, telling Time Magazine last month that “it’s hard to bring things down once they’re up.” If the 2024 presidential campaign taught us anything, it’s that rising grocery prices have tremendous political consequences for incumbents. Higher food prices — even more than energy prices — can cause household expectations for future inflation to jump. Eggs are a staple and, as any home cook will tell you, nigh impossible to replace with a similar low-cost equivalent. That’s why Trump and Vice President-elect JD Vance made a point of spotlighting egg prices as they hammered away at Joe Biden and Kamala Harris over the course of the campaign. Consumers “literally and figuratively eat higher egg prices,” said Ernie Tedeschi, the former chief economist for Biden’s Council of Economic Advisers who is now with Yale’s Budget Lab. “That’s why higher egg prices particularly piss consumers off.” The economic impact of the bird flu will only become more potent if outbreaks accelerate beyond poultry farms, Andrew Novakovic, the E.V. Baker Professor of Agricultural Economics Emeritus at Cornell University’s Charles H. Dyson School of Applied Economics and Management, told MM in an email. The growing number of cases at dairy farms — which prompted California Gov. Gavin Newsom to declare a state of emergency last month — “may be a bit [of] the canary in the mineshaft indicating disease spread to other mammals, both domestic and wild,” he said. “USDA now has the social license to more aggressively test and monitor infections in dairy herds (we already had that with poultry flocks),” he wrote. “I suspect the medical communities in areas where there has been dairy exposure is more attuned to symptoms in humans.” “The more tepid our response the less reason we have to be optimistic,” Novakovic added. It’s TUESDAY — Senate Finance will hold a confirmation hearing for Trump Treasury pick Scott Bessent on Thursday. What do you want to know? What should lawmakers be asking? If you have thoughts, reach Sam at ssutton@politico.com.
| | The NFIB Small Business Optimism Index for December is out at 6 a.m. … The Labor Department will release the Producer Price Index at 8:30 a.m. … Kansas City Fed President Jeffrey Schmid will speak about economic and monetary policy at 10 a.m. … The Urban Institute holds a virtual discussion on “Recapitalizing the GSEs through Administrative Action” at 11 a.m. … The Brookings Institution holds a discussion on "3 Financial Crises and Lessons for the Future,” featuring remarks from FDIC Chair Martin Gruenberg, at 2 p.m…. How to eat an elephant? One bite at a time — Some of Trump’s top advisers are discussing plans to slowly ramp up tariffs on a monthly basis, thereby “ boosting negotiating leverage while helping avoid a spike in inflation,” Bloomberg’s Jenny Leonard and Saleha Mohsin report. The advisers working on the plan include Bessent, Kevin Hassett, who is poised to be director of the National Economic Council, and Stephen Miran, Trump’s pick to lead his Council of Economic Advisers. — The plan echoes one floated by Miran, a senior strategist at Hudson Bay Capital, in a lengthy post-election investor note published after the election. The incoming administration could “minimize uncertainty” over Trump’s plans for Chinese tariffs by releasing forward guidance on its demands, he wrote, then “gradually implement tariffs if China does not meet these demands. It might announce a schedule, for instance, a 2% monthly increase in tariffs on China, in perpetuity, until the demands are met.” Musk’s team — Elon Musk, the world’s wealthiest man and the co-lead on Trump’s Department of Government Efficiency, has tapped a coterie of Silicon Valley billionaires and tech executives to assist in efforts to slash as much as $2 trillion from the federal budget, the NYT’s Theodore Schleifer and Madeleine Ngo report. “Many of the executives involved are expecting to do six-month voluntary stints inside the federal government before returning to their high-paying jobs … The representatives will largely be stationed inside federal agencies.”
| | A message from U.S. Bank: At U.S. Bank, we’re committed to helping small businesses grow. The Spicy Olive, a thriving Ohio-based gourmet foods shop, is one of over 1.1 million small businesses we are proud to serve. Since 2012, Melanie Cedargren has been able to expand her business from one shop to three. U.S. Bank has been by her side every step of the way. Learn more about U.S. Bank’s support for small business. | | | — Meanwhile, WaPo’s Cat Zakrzewski and Jacqueline Alemany detail how venture capitalist Marc Andreessen and his peers are pressing Trump to scrap Biden’s executive order on AI, “which invoked emergency powers to require companies to test the safety of their systems and report the results to the federal government.” “Anything I haven’t asked that I should be asking?”— Massachusetts Sen. Elizabeth Warren (D-Mass.), the top Democrat on Senate Banking, on Monday sent a list of more than 180 questions to Bessent before his hearing. She asked the hedge fund executive for clarity on his views on taxes, tariffs, economic sanctions, bank mergers, the independence of financial regulators, the Consumer Financial Protection Bureau, and housing, among other policy areas, Michael Stratford reports. — Warren also extended an olive branch (of sorts) to Republicans in a WSJ op-ed, saying she would work with Trump, Senate Banking Chair Tim Scott (R-S.C.) and business leaders “whenever they support policies that rebuild the middle class, advance our economic and national security, and fight the corruption of those who seek to use government to enrich themselves,” she wrote. First in MM: House Financial Services Democrats to pick leaders next Tuesday — Democrats on the committee will hold their organizing meeting for the new Congress a week from today, an aide tells Eleanor Mueller. Members will decide then who will serve as the ranking member on each subcommittee, as well as who will serve underneath them. Chair French Hill (R-Ark.) tapped subcommittee chairs last week.
| | The CBA’s CFPB playbook — The Consumer Bankers Association unveiled a white paper calling for changes at the CFPB as the Trump administration prepares to take power. In addition to pushing for a reexamination or rescission of landmark rules affecting overdraft fees, credit card late fees and consumer financial data — which some banking groups have sued to halt — the consumer banks are pushing to unwind ethics requirements “that strongly disincentivize the recruitment and retention of personnel with industry expertise relevant to the CFPB’s authorities and mandates,” according to a copy provided to MM. “Whether it's industry or academia or consumer groups, you don't want just one mentality — one viewpoint — to be at the table when you're writing these different rules,” CBA President and CEO Lindsey Johnson said in an interview, contending that the agency hasn’t adequately accounted for industry input as it crafted new rules. Parting shot — The WSJ’s Rebecca Picciotto reports that the Federal Trade Commission is preparing to sue the country’s largest landlord, Greystar Real Estate Partners, over allegations of hidden fees charged to tenants. The Gensler SEC’s final hurrah — In what is likely to be one of the final cases brought under Chair Gary Gensler, Declan Harty reports that Robinhood will pay $45 million to settle a slate of charges levied by the SEC over alleged infractions related to its suspicious activity reports, stock lending program and unmonitored employee communications. Coinbase notches a victory — Also from Declan: “Federal judges ruled Monday that the SEC failed to properly explain why it rejected a call for new cryptocurrency rules from exchange giant Coinbase.”
| | | | A message from U.S. Bank:   | | | | | Wildfires and fiscal conflagrations — Trump and House Republicans are considering a plan that would link federal aid for Los Angeles County’s devastating wildfires to a debt limit increase, Meredith Lee Hill reported Monday. The discussion, which occurred during a dinner at Mar-a-Lago, did not include House Speaker Mike Johnson and no final decisions were made about the way forward. Johnson later acknowledged the discussions. “We’ll see where it goes,” he told reporters, adding that he supported putting “conditions” on California wildfire aid. Movement on Child Tax Credit — House Republican Conference Vice Chair Blake Moore (R-Utah) plans to introduce a bill that would boost the child tax credit to $4,200 per child up to age 5 and $3,000 per child between 6 and 17, Benjamin Guggenheim reports. Even amid concerns about the ballooning cost of GOP-led tax reforms, it’s a sign that Republican leaders are serious about expanding the credit as part of their budget reconciliation plans.
| | | Friends in high places — Kalshi has tapped Donald Trump Jr. as a strategic adviser as the prediction marketplace spars with regulators over the future of domestic betting markets, Declan Harty reports. RTP: Return to picket? — JPMorgan Chase employees are bristling at the bank’s new five-day in-office work policy, Rebecca Ungarino of Barron’s reports. Some employees are thinking about forming a union, though “worker unions in the financial services sector are rare and gathering enough support among employees may be a long shot.”
| | A message from U.S. Bank: At U.S. Bank, we recognize and celebrate small business owners for their vital contributions to our communities and economy.
That’s why we’re proud to support small business owners like Melanie Cedargren, founder of The Spicy Olive, a thriving Ohio-based gourmet foods shop. With our help, Melanie was able to expand her business from one shop to three.
U.S. Bank is committed to fueling growth for small businesses like The Spicy Olive. With a 74% rise in SBA lending this year, we are helping more small businesses continue to thrive and contribute to local economies. We serve over 1.1 million small businesses nationwide, providing financial guidance and resources to help them succeed. Because U.S. Bank is small enough to care, and big enough to make a difference.
Learn more about U.S. Bank’s support for small business. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
