Bureau of Labor Statistics

It's not just beef, pork, shrimp, eggs, and orange juice... If you think that the price of food is high now?  Just wait.  If current trends continue, many of the most common food items that Americans buy will cost more than twice as much by the end of this decade. Even if nothing else bad happens (and that is a very questionable assumption to make), our food prices are going to be moving aggressively upward for the foreseeable future.  But what if something does happen?  In recent years, global food reserves have dipped to extremely low levels, and a single major global event (war, pandemic, terror attack, planetary natural disaster, etc.) could create an unprecedented global food crisis very rapidly.

Democratic strategists have made a blunt declaration in an election-year memo, according to AP, "Don't talk about the economic recovery. It's a political loser." Stan Greenberg, James Carville and others wrote that in head-to-head polling tests the mere mention of the word "recovery" is trumped by a Republican assertion that the Obama administration has had six years to get the economy moving and its policies haven't worked. But, but, but... stocks are at all-time highs?

We previously noted that both beef and pork (courtesy of the affectionately named Porcine Epidemic Diarrhea virus) prices have been reaching new all time highs on an almost daily basis. It is time to update the chart. Below we show what a world in which the Fed is constantly lamenting the lack of inflation looks like for beef, pork and shrimp prices.

Does the average American actually exist? The guy that the Bureau of Labor Statistics basis its figures on. It seems that the fictitious character is out there somewhere being hunted down; or perhaps the man was shot down long ago in some past that the country invented for itself in the hope of spinning another yarn about how rich the Nation was

Having warned just 6 weeks ago that high-yield credit and small high-tech firms may be in a bubble, Fed Governor Tarullo, ironically speaking at the Hyman Minsky Financial Instability Conference, suggested that the recuction in share of national income for "workers" (i.e. income inequality) is troubling. Furthermore, he added, "changes reflect serious challenges not only to the functioning of the American economy over the coming decades, but also to some of the ideals that undergird the nation's democratic heritage." His speech, below, adds that since there has been only slow growth so far, expectations for a growth spurt are misplaced and that the Fed-policy-driven recovery has "benefited high-earners disproportionately."

Employment is a function of demand by customers on businesses. As opposed to many economists and politicians, businesses do not hire employees to be "good samaritans." While such a utopian concept is fine in theory, the reality is that businesses operate from a "profit motive." The problem is quite clear. With the consumer heavily leveraged, the inability to "spend and borrow" is reducing aggregate demand.  As stated, the current level of aggregate demand simply isn't strong enough to offset the rising costs of taxes, benefits and healthcare (a significant consideration due to the onset of the Affordable Care Act) associated with hiring full-time employees. Therefore, businesses initially opt for cost efficient productivity increases, and only hire as necessary to meet marginal increases in customer demand which has come from population growth.

If the U.S. economy is getting better, then why are major retail chains closing thousands of stores?  If we truly are in an "economic recovery", then why do sales figures continue to go down for large retailers all over the country?  Without a doubt, the rise of Internet retailing giants such as Amazon.com have had a huge impact.  Today, there are millions of Americans that actually prefer to shop online. But Internet shopping alone does not account for the great retail apocalypse that we are witnessing.  In fact, some retail experts estimate that the Internet has accounted for only about 20 percent of the decline that we are seeing.  Most of the rest of it can be accounted for by the slow, steady death of the middle class U.S. consumer.  Median household income has declined for five years in a row, but all of our bills just keep going up.  That means that the amount of disposable income that average Americans have continues to shrink, and that is really bad news for retailers.

A look back in time helps one spot the banker propaganda about gold and silver so prevalent today.

After surging yesterday for no reason whatsoever because as we explained on several occasions, there were no surprises in the Tuesday BOJ statement, and the doubling and extension of its loan facilities was implicit and factored into the doubling of its monetary policy (as goldman explained quite well), both the Nikkei and the USDJPY has been forced to revert, with the latter all important carry funding pair back to 102 and in danger of sliding lower, as a result ES is now below yesterday's lows. Which is why the 102 USDJPY "invisible hand" tractor beam will be all important today especially if the market finally starts paying attention to the proxy civil war that has gripped the Ukraine. Stocks traded lower, albeit in a relatively range-bound range this morning, with the Spanish IBEX-35 underperforming. Banking names remained under pressure, with focus still on yesterday’s reports that Spanish banks' bad loans marked a fresh record, together with comments by ECB's Weidmann, who said that sovereign debt purchases would constrain the central bank via political pressure. Similar view was also echoed by ECB’s Nowotny, who said that government bond buying US Fed-style would be difficult to do under ECB's mandate.

• HSBC 171K
• Barclays 175K
• Citigroup 180K
• Bank of America 185K
• Deutsche Bank 200K
• UBS 200K
• Goldman Sachs 200K
• JP Morgan 205K

With all eyes hope-full-y transfixed on tomorrow's non-farm payrolls data and its confirmation-biased 'select-a-headline' post-data farce, we thought it worth a look at the noise in the signal and a reminder, as Bloomberg's Joseph Brusuelas notes, the annual benchmark revisions that will be published and likely obliterate everything we thought we knew about job growth (or lack of). As Brusuelas notes, the January jobs report is likely to be better-than-forecast because the weather-impacted December estimate will see upward revisions as firms probably made up for hiring postponed during the previous month. While weather effects may dominate the topline estimate, the underlying trend in hourly and weekly earnings is likely to remain quite weak since it’s not contingent on swings in seasonal patterns.

Following the evaluation of liquidity needs (and availability) for the Commonwealth of Puerto Rico, S&P has decided that "it doesn't warrant an investment-grade rating":

• PUERTO RICO GO RATING CUT TO JUNK BY S&P, MAY BE CUT FURTHER
• GOVT. DEVELOPMENT BANK FOR PUERTO RICO CUT TO BB FROM BBB-:S&P
• PUERTO RICO GO RATING LOWERED TO 'BB+': S&P
• PUERTO RICO REMAINS ON WATCH NEGATIVE FROM S&P

Both the G.O.s and the Development Bank have been cut. Note that 70% of muni mutual funds own this - and it is unclear if a junk rating forces (by mandate) funds to cover. Worst of all, S&P warns Puerto Rico could now face a $1 billion collateral call on short-term debt - the same waterfall collateral cascade that took down AIG.

Miserable? Feeling like you want to turn the corners of the smiley down so it reflects your current mood? Believe you would get the lead role in the Les Misérables?

The President will do his best to put a positive spin on the current economic environment and the success of his policies to date when he gives his speech tonight.  However, how you define the current environment may have much to do with where you fall in current income distribution.  This was a point made by Mr. Boyer: "In 2012, the richest 10 percent of Americans earned their largest share of income since 1917, said Emmanuel Saez, an economist at the University of California at Berkeley. Meanwhile, Census Bureau statistics showed that real average income among the poorest 20 percent of families continued to fall each year from 2009 to 2011." As with all things - it is the lens from which you view the world that defines what you see.  In the end, it will be whether we choose to "see" the issues that currently weigh on economic prosperity and take action, or continue to look the other way.  History is replete with examples of the demise of empires that have done the latter.