1) Consumer confidence for January came in at a 16 year low. The market tanked 300 points.

2) MF Global incurred $141 million in unauthorized trading losses in wheat on Tuesday. On that day the market in wheat was limit down and limit up in the same day, producing an intra day range of 25%, the greatest in history for any commodity. The inside story was that the trader involved suffered a computer systems crash in the middle of all this and didn't know his positions while all of this was going on. To MF Global's credit they announced the loss the next day. This is why you never use a cheap computer for a trading platform.

3) Copper could be the next metal to move. It is at the top of a two year trading range at $3.60. You could get a big rotational move into copper as traders move out of gold,  which is rapidly approach $1,000 an oz, the target for many for the year. The inflation adjusted all time high for gold is $1,200 which is now a chip shot, and the two year target for many is $1,500.

4) Pimco's legendary bond investor Bill Gross says the next big problem market will be commercial real estate. He is prone to extreme forecasts to suit his own book. He predicted the Dow would drop to 5,000 in 2002 and missed by 2,500. He also said that muni bonds now offer 'historic' opportunities.

5) Recession prospects are driving consumers to eat out less and at home more. Sell Morton's and Red Lobster and buy Heinz, Hormel (Spam) and Del Monte (canned beans).

STRATEGY IDEA OF THE DAY

Commodities are now red hot and will probably keep running for a while. The main reason they are the flavor of the day is that hedge funds can't trade bonds because the markets have vaporized, and think it is way too early to buy stocks. So there is no where else for them to go. A great way to play commodities is to buy Brazil. The Bovespa stock index ($BVSP) is at 65,000, close to an all time high. Among things going right: the country is now 100% self sufficient in energy thanks to a high reliance on domestically produced ethanol. Its major commodities like sugar and iron ore, have risen 50% since the summer. Petrobras Energia (PZE) ($11.5) has made a major offshore oil discovery and is itself a strong buy. It is debt free and is in fact a net lender now to the US. No sub prime or real estate crisis. Warren Buffet is playing this by going long the Brazilian currency, the real. Having covered as a journalist the big Brazilian debt default crisis in the seventies this is all amazing to me.

1) Natural Gas went ballistic today, up 5% to $9.46. Crude closed at $102.20. Fed governor Bernanke is driving prices, not OPEC.

2) Thoroughbred horse sales at Keeneland have fallen off a cliff, another leading economic indicator.

3) Incredible stat of the day: Triple 'B' rated bonds a year ago traded 200 basis points over Treasuries. Now they are 800-1,000 basis points over Treasuries, an all time high.

4) Michael Jackson's palatial fantasy estate in Southern California, Neverland, complete with its own merry-go-round and Ferris wheel, is going into foreclosure unless he can come up with $24 million by March 14. It almost certainly has negative equity and the bank will take it back. Weren't you looking for a weekend place?

5) China is raising its minimum wage by 17% to $120 a month. Of the last 50 centuries, China had the world's dominant economy for 48. The rise of China today is just a reversion to the mean.

6) There was massive buying of long dated calls in Toll Brothers and Pulte Homes which are among the best performing stocks in the market this year.

7) US labor costs are now 30% cheaper than in Europe. This will lead to more factory construction in the US.

8) The California state pension fund (Calpers) is raising its allocation to commodities 16 times to $7 billion. A sign that a top in this torrid asset class is not far off.

THOUGHT OF THE DAY

What has been driving the euro up against the dollar for the last 8 months has been stubbornly high euro interest rates and the most rapid decline in dollar interest rates in history, causing the euro/dollar interest rate differential to widen to a record 300 basis points. What happens next? The Fed will carry out its last 50 basis point rate cut at its March meeting. After that the next Fed rate move will be a rate increase to head off inflation, possibly quickly. The European central bank will be forced to cut its rates as the effects of the US recession spill over there. This will cause the dollar/euro interest rate differential to shrink dramatically. This scenario has the euro peaking at the $1.55 to $1.60 range sometime in Q2 2008. After that it could retrace as far back as $1.25 over the following year. Q2 could be a good time to take profits in an any euro based assets you may have.

TRADE RECOMMENDATION

Copper could be the next metal to move. It is at the top of a two year trading range at $3.60 and is clearly breaking out to the upside. You could get a big rotational move into copper as traders move out of gold,  which is rapidly approach $1,000 an oz, the target for many for the year. Chinese demand has been voracious in the massive construction build out for the Olympics. Electrical cars, the most immediate short term solution to high oil prices, use a lot of the red metal. And there are no major new mines coming on stream in the foreseeable future. A classic supply demand squeeze.

1) The big development today was the Euro which finally blasted through $1.50, which had capped it for the last three months. Short covering took it all the way up to $1.51. All of the other weak dollar plays, like gold and silver, soared to new highs. Next stop $1.55.

2) The EU hit Microsoft with a $1.35 billion fine. MSFT is the most fined company in history. The stock was unchanged. This amount is only two weeks of free cash flow for Mr. Softy. It's just another cost of doing business for them. I think the stock is a strong buy here at $28.

3) Fannie Mae and Freddie Mac said they would eliminate caps on jumbo loans on March 1. This means that these loans can be securitized for the first time. It will be helpful when people start buying securitized mortgages again, which may be by year end. This will be big news for sellers of luxury homes in New York, California and Florida.

4) The Hang Seng soared 769 points last night. It is up 15% since I showed you that chart and is on its way back to HK$31,000.

5) With Google stock plummeting from $750 to $449 Sergei Brin and Larry Page have each lost $8 billion in net worth since November. Their holdings have dropped from $21 billion to $13 billion each, some 40%. This is the sector you want to be in when the market recovers.

6) Toll Brother announced a record loss and said they see no recovery on the horizon. The stock was unchanged. These stocks are totally sold out, and in fact are the best performing sector of the market this year.

9) New home sales in January came in at an annual rate of 533,000, a 13 year low. At least 1.2 million homes a year are needed to meet the demands for population growth.

1) Yesterday's 182 point rally in the last 30 minutes came from Standard & Poor's  announcement that it would maintain  bond insurer MBIA's AAA rating. They indicated they might downgrade the company later. This shows how backward looking and useless these ratings are as MBIA's bonds are already trading at B- levels. Is MBIA really the same credit as GE?

2) Wheat went up a staggering 25% yesterday as Kazakhstan announced it would restrict exports to head off domestic shortages. Wheat is now up 400% YOY. Every major wheat producing area outside the US is now in a drought.

3) The US announced it would support gold sales by the International Monetary Fund. The price went down $10 immediately then shot up to a new high of $954. In a normal market gold would have dropped 10% on this news, so it shows how strong the demand for gold is.

4) The producer price index for January came in at 7% YOY, the hottest number in 23 years. More ammo for the stagflation camp.

5) Natural Gas rocketed to $9.36, a two year high. It's up 25% in a month and is going higher.

6) Google announced that its pay per click revenues were down 7% in January. The stock got slammed 8% down to $449, a 52 week low. They are obviously feeling the absence of the Foggy Bridge Wine Cruise!

7) Home foreclosures leapt 57% in January YOY. Banks are taking possession of 90% of these, indicating that they have negative equity. Another 220,000 homes got late payment notices that month.

8) CNBC has an interesting interview with Sam Zell who made the following points. He is selling the Chicago Cubs but splitting them off from Wrigley Stadium which has valuable unused naming rights. He says that there will be no recession, just a slowdown because most of the current problems are confined to Wall Street, not Main Street. He expects housing to start recovering in the Spring!?

1) The spread between Treasuries and AAA rated corporate bonds is now 300 basis points, the largest since the Great Depression. At the first hint of the end of the credit crisis hedge funds will rush to buy corporates and short Treasuries against them and this spread will come screaming down. With a leverage factor of ten times this trade currently yields 30% a year. The hedge funds that are currently in trouble are the ones that put this spread on in big size at 20-30 basis points a year ago.

2) Visa is going public in a few weeks, launching the largest IPO in  US history which will take in about $19 billion. There is some concern that the size of the deal will divert some money away from the rest of the stock market. Master Card's business has been booming as people reduce the number of cash transactions in favor of more internet based credit card transactions. Master Card's stock has been one of the best performing stocks of the past year and is close to its all time high. This is because it is just a processor of transactions and  not a lender.

3) Value players are pouring into Japan, where at a 13 times multiple stock prices are at a 23 year low. Today China's sovereign wealth fund announced that it is investing $10 billion in Japanese oil and commodities related stocks.

4) A home owned by the Hearst family in Florida was sold at a foreclosure sale for $22 million to the prime lender. It had $40 million in bank loans on it.

5) Horrendous home sales figures for January came out this morning. Sales are down 23% year on year. Inventories were up 5.5% to a ten month supply. Average prices are down 4.8%. Anyone who thinks the housing crisis will end soon is either smoking something or talking their own book.

6) Coal has doubled in price over the last three months. There are now 100 coal fired power plants under construction in the US. With a 200 year supply the US is the Saudi Arabia of coal. The only question is whether you can bring this much new coal generation on stream without causing major environmental problems. Hence Bush's comments last week about clean coal technologies.

1) A new wrinkle has developed in the housing crisis. Loans have been sold so many times that banks are unable to foreclose because they can't find the original loan documentation. This could affect up to 40% of the anticipated 1.5 million foreclosures in 2008. New businesses like youwalkaway.com have sprung up to help borrowers head off foreclosures by finding deficiencies in the  disclosures in the original loan documentation. Some 19% of home mortgages in the US, or $2.1 trillion, have been securitized.

2) Another economic indicator: MGM Mirage says that middle market gamblers have been drying up because of the high price of gas to get to Las Vegas and economic worries. High end gambling and foreign gamblers continue strong, as is the management of foreign casinos like in Dubai. Yet another industry that sees all of its future growth in the overseas markets.

3) Here is another extreme anomaly in the market. Crocs, the maker of the world's ugliest shoes, has seen earnings rise 147% in the past year. But the stock has fallen from $75 to $26 since June because investors are shunning all high end discretionary consumer stocks and is now at eight times next year's earnings. Put it on your watch list.

4) Another one of these is Garmin, maker of navigational devices. Earnings are up 65% but the stock is down 50%. The company has spent $350 million on R & D in the last three years so there are many highly profitable products in the pipeline.

5) Merrill Lynch put out a report predicting that the residential real estate market will fall another 25% by the end of 2009. Freddie Mac, Fannie Mae, and the home builders got slammed.

6) Rumors of a bailout of mortgage insurer Ambac in the last 30 minutes of the day. The market rallied 250 points in 30 minutes.

THOUGHT FOR THE DAY

With commodity prices as high as they are now, inflation will rocket when the economy comes out of the recession next year. The best way to play this is to short long bonds. If the 30 year goes from a 4% yield to an 8% yield, which they may do over the next three years, the underlying price of the bond will drop by half. Zero coupon bonds could drop by up to 80%. We are already seeing the beginnings of this trade now. Last June the yield curve was virtually flat with two year and 30 year paper yielding close to 5%. Now two year paper is at 1.9% with the 30 year at 4.4%. This curve steepening trade is now a major trade for hedge funds.

1) The Architectural Design Services index fell sharply in January from 55 to 50. The boom, bust level is 50. Below 50 means that more business is being completed than there is new business coming in. This is the second consecutive quarterly decline. A drop in architectural services is followed by a decline in commercial construction activity nine months later. Overall, commercial real estate construction grew by 13.2% in 2007, but no growth at all is expected in 2008. There especially has been a fall off in spec properties as financing for these has dried up. Time to renegotiate the presidio winery construction contract?

2) Whenever oil hits a benchmark a bunch of interesting data spews out. The US has 5% of the world's population but is using 25% of the world's oil. Global oil production is 85 million barrels a day and is not expected to rise much from there. At $100 a barrel the US is paying $500 billion a year to foreigners to buy oil, most of whom hate us.

3) Boone Pickens said he is shorting oil over $100 with a Q2 target of $85. I have been following this guy since the early eighties when I met him while working at Morgan Stanley on an oil company merger. I have never known him to be wrong about oil. (Remember the Pacman mergers when it was cheaper to prospect for oil on the floor of the NY stock exchange than in the field?)

4) Oil has become the safe haven asset. Instead of a flight to the dollar in times of uncertainty, you are now getting a flight to oil. There is great reluctance by foreigners to go into dollar denominated assets now.

4) All time highs today in oil, gold, palladium, platinum, coal, iron ore, and bulk shipping. Stocks and bonds are dead.

5) The CEO of Hovnanian, a major home builder,  came out and said that the housing market will recover at the end of 2008. Wishful thinking.

1) In the last bear market we had six false rallies of 5% over an 18 month period. Then the market was discounting both the dot com bust and 9/11. We are four months into this bear market and so far we have had two false rallies. The main driver has only been changing accounting standards. Actual defaults on sub prime loans are not enough to give this bear market legs. We need a completely new, out of the blue crisis if this bear market is going to be as long lived as the last one.

2) China is losing an average of $4 billion a month on its treasury holdings because of the weak dollar. The next big leg down in the dollar will be triggered by China's move to diversify away from the US currency as a reserve asset, possibly sometime after the Beijing Olympics. Euro could go to $1.60 on this.

3) Goldman Sachs has fallen from $250 to $170 and is now selling for seven times earnings and is getting tempting. This is the only major firm that made a profit off of the sub prime crisis.

4) Commercial real estate prices have dropped about 15% from last year's peak. They are not expected to drop further as long as income streams are maintained at current levels which they will as long as the recession remains a short one.

5) Natural Gas over $9 today, my home run recommendation of the month. It is up 20% from my entry point 4 weeks ago.

6) Harry Macklowe is selling the GM Building on 5^th avenue in Manhattan which he bought in 2003 for $1.4 billion. A bidding war has broken out with three players coming in with bids over $3 billion, or more than $1,500 a square foot. While this is far in excess of the market for this type of property, it shows the degree to which trophy properties are commanding premiums to the market.

THOUGHT OF THE DAY

There is a massive flight to liquidity going on. Hedge funds are dumping every kind of bond, afraid that market will close and trap them, and pouring the cash into all commodities. Oil is being dragged up by gold, palladium, copper and the grains. This is all being financed by the Fed rate cuts, which in trying to deal with one bubble (Housing) they are merely creating another (Commodities).

1) Sony won the format war with its blue ray DVD's. The final nail in the coffin was Walmart's announcement last week that it will no longer carry Toshiba's rival HD-DVD format machines. This is the first time that Sony has won one of these wars. Remember Betamax?

2) Credit Suisse announced $2.8 billion in write downs because of 'mispricing' by traders. 'Mispricing' is Swiss German dialect for “rogue trading”. The market has become inured to these announcements so no sell off today.

3) Under the Fed's TAF program it has loaned $50 billion directly to European banks in February so far, and $200 billion since the program started in December. The Fed has morphed into the de facto European central bank. This will eventually be highly inflationary.

5) The crisis in the Auction Rate Securities market spilled over into every corner of the corporate debt market at the end of last week, from triple 'A' corporates to junk. More credit spread repricing which in the long term can only be good for investors, especially those with new money. Stocks are being supported by a flight to quality bid as investors shun any kind of debt instrument as fallout from sub prime.

6) Treasury bond prices fell off a cliff today. I recommended you sell all bonds when the 10 year yield was 3.22% in January. It is now 3.85%. If you have any bonds left anywhere please, please sell them. They will go down a lot more when real inflation hits next year.

7) If you remember my S & P 500 1200-1450 short strangle recommendation in January, it expired out of the money on Friday with the index at 1,352 for a total profit of 5% plus. You could put the same trade on now and take in another 5% over the next four weeks. The total profit on this would be $200,000 on $2 million in capital over two months.

8) There are rumors that Lehman Brothers is about to announce large losses in real estate lending. A rogue commercial real estate department?  'Lehman lied' isn't exactly something they'd like to read in the papers these days.

THOUGHT OF THE DAY

The US is setting itself up for a serious bout of stagflation from next year. We will be coming out of this recession with oil in the $60s-$70s and most other commodities at all time highs, so imagine what inflation will do when the economy recovers. Yet housing will still be a major drag on the market for a couple of years. The last time this happened was during the seventies, which no so coincidentally was the last time the US lost a war.

1) Target (TGT) is now looking like a potential takeover candidate. When I have time I troll through 13-F filings looking for recent share accumulations. These are public disclosures filed with the SEC by hedge funds with over $100 million in assets. Five major hedge funds have started building large stakes in Target, including Eddie Lampert who took over Sears a few years ago. The stock was already on my 'buy' list as a cheap, early cyclical retailer. The stock has fallen from $70 to $45 since June. Earnings have fallen by 2/3 in a year, but will triple in any recovery. Look for the share price to double in two years. Home Depot is another one of these.

2) Sub prime interest rate resets, now running at $40 billion a month will go to zero by the end of the year. Outstanding loans will either refi in the current low interest environment or go into default this year. After that the problem will be gone.

3) The US  population is growing by 3 million a year, or 1.2 households. Housing starts can't fall below a 1.2 million annual rate for very long or people will have to start living in cardboard boxes under freeway overpasses.

4) Consumer confidence came in this morning at the lowest level since 1992.

5) Money is now cheap but unavailable. The Fed has cut interest rates by 2.25% since August, but triple 'A' rated State of California tax free bond yields have risen from 4% to 10% as of yesterday.

6) China is building a new electric power plant every 4 days. The recession for them means growth slowing from 11% to 8%.

7) Oil is above $96 this morning, not exactly anticipating a recession. OPEC is meeting in early March and many are expecting production cutbacks. They are clearly trying to manipulate the price higher. Sell oil, buy natural gas and coal!

8) 50% of all new venture capital spending is going into start ups creating clean energy sources, a radical change since the nineties. If even just one out of ten of these companies becomes successful the US could become energy independent within 20 years.

9) Financial markets closing early today. The rush to get out of Dodge has started.

1) A new credit crisis has exploded on to the scene. The Auction Rate Securities Market has failed. This is a $300 billion market for floating rate notes for municipalities. It is the primary vehicle for public authorities to raise cash to pay short term bills. For example, Port Authority of New York and New Jersey bonds, which normally yield 4%, are now yielding 20%. Usually dealers step in to soak up any warehouse excess paper in the market, but they can't now because they are all capital constrained and in risk reducing mode. If this problem is not sorted out soon cities will have to start laying off employees and suspending services for lack of funds. This is a totally unnecessary crisis because no municipality has defaulted since Orange County did so in 1994. At the very least this will increase borrow costs for public entities.

2) On the good news front, Morgan Stanley and Bear Stearns managed to place $1.2 billion in mortgage backed securities last night, the first such placement this year. They are yielding 235 basis points over treasuries vs. 60 basis points a year ago. It’s just a toe in the water. Granted, this was for a package of commercial real estate loans and not residential loans, and the size is very small, but it is an important step in the risk repricing and market reopening process. Now others have a price they can trade around. History shows that these initial deals after any crisis always turn out to be immensely profitable. Please recall people buying S & L loans in the early nineties for 10 cents on the dollar. The same happened in Japan. This has a 'light at the end of the tunnel' feel to it.

3) The Swiss bank UBS announced a quarterly loss of $11.3 billion, the largest in history.  It has remaining exposure in sub prime of $28 billion. I was a director of this company for a year and have to say that I am not surprised. They were always the most aggressive of the Swiss banks.

1) Masco, a major building materials supplier, announced terrible earnings, citing a fall off in new housing starts among its customers of 25-33%. The stock got slammed. Still no light at the end of the tunnel in housing.

2) Sub prime related law suits against directors and officers are skyrocketing.  In 2007 there were 191 law suits with $3.9 billion in claims initiated, four times the previous year's figure.

3) Fund manager cash levels are at the highest levels since 2001, all fuel for the next bull market.

4) Private business jet sales in 2007 totaled 1,138, up 28%, an all time high. Fractional ownership has been the big driver as businesses try to avoid the post 9/11 hassles of airport travel. The rich are definitely getting richer.

5) Global wheat stocks are at a 30 year low and US stocks are at a 60 year low. The inflation adjusted all time high is $20 a bushel, the target that traders are gunning for this year, compared to last week's high of $12.

6) We are ¾ of the way through the fourth quarter earnings reports. Excluding financials US corporate profits are up 13%, a great year for anyone with international business. The problem with the economy is not with corporate earnings but expectations. We may be talking ourselves into a slowdown which is not warranted by fundamentals.

7) US retail sales came in at +0.3% compared to an expected -0.3% spurring a 173 point rally in the Dow.

1) Did you know that if the rest of the world ate like Americans the world food supply would have to increase 2.4 times? This is one of the factors driving up commodity prices. Some 24% of US corn production now goes into ethanol. Commodities markets are so small that one hedge fund could buy the entire open interest in any one of them. That is why when they go up, they go up really fast. It is like trying to get a billion dollars through the eye of a needle. This will provide strong underlying support for many commodities for the next decade.

2) Treasury secretary Hank Poulson announced the 'Hope Now” coalition of five major banks to initiate a 30 day moratorium on all foreclosures. This is another feel good measure that will not work. A popular Wall Street expression is that 'hope turns to bloat.'

3) Warren Buffet has offered to buy the entire $800 billion municipal bond portfolio of the three bond issuers, Ambac, MBIA, and FGIC. This will never happen because it would mean spinning off the only profitable parts of their business and leaving them only with sub prime toxic waste. It does underline the extreme cheapness of muni bonds at the moment, and Buffet's offer will stand as a stop out in case the above three insurers go under. Muni bonds rocketed on the news. I mentioned the attractiveness of muni bonds in my February 8 comments.

4) William Lerach plea bargained to a two year prison sentence and $7.6 million in restitution for illegal payments to his plaintiff witnesses. There was no figure more universally despised in Silicon Valley for his bogus class action suits on earnings shortfalls. It's a great deal. He will go to a camp, be out in a year, and gets to keep the $2 billon he made in the racket. Stamps anyone?

5) The global FIFO phenomenon is generating a major hedge fund trade at the moment. The idea is that since the US will go into recession first it will be the first out, with Europe lagging. Hedge funds are shorting US Treasuries and going long European bonds in massive size to take advantage of this. It looks like a good trade.

5) The Sports Illustrated annual swim suit issue came out today. For the last 45 years when blondes are on the cover the Dow Jones goes up 11.6% that year. With brunettes it is only 2.2%. This year the cover girl is blonde. BUY!

1) Toll Brothers is seeing a 61% cancellation rate for Florida condos. The market is so bad that a family feud has erupted within the company. Even Bruce Toll's daughter, Wendy, has defaulted of the purchase of a $2.5 million unit there.

2) Amazon has announced a $1 billion share buy back.

3) Yahoo has rejected Microsoft's bid, saying it won't consider anything less than $40 a share. Microsoft will probably raise its bid to $35. The company has so much cash that it can pretty much do whatever it wants. Yahoo has 500 million users worldwide.

4) Dow Jones is rebalancing the Dow Jones index, taking out Altria (the old Phillip Morris) and Honeywell , and adding Chevron and Bank of America.

5) In the last two weeks the futures markets for euro interest rate futures has moved from no chance of a cut, to a certain cut of 0.75%. This is why the euro has backed off from $1.49 to $1.45.

6) Today's disaster d' jour is AIG which announced $5.2 billion in sub prime losses.

7) One stock I want to follow is Harley Davidson, partly because I like the ticker symbol (HOG). The luxury brand retailer has seen its stock fall from $72 to $35 since June. However, it may be a little early to go into high end consumer discretionaries.

8) CNBC has been running a series on the history of Nike. Nike paid a student at Portland State $35 to come up with the swoosh logo which became one of the most famous in the world. It was so successful that ten years later the company felt guilty and gave her some stock and a diamond ring.

TRADE RECOMMENDATION

Apple (AAPL), one of the four horsemen of 2007, is now selling for only $119 with a PE multiple of 20. If you ignore all of the hype, PR, and media manipulation about the Iphone, the IPOD, etc. the stock is worth buying at this price for the Imac business alone. A new category of stock has emerged, the value growth stock, i.e. a growth stock selling at value price levels and this is one of them. The stock is a screaming buy here, a rare opportunity to buy a best of bread company at a fire sale price. Load the boat!

1) There are an usual number of anomalies in the market piling up right now. Tax free municipal bonds are now yielding more than taxable treasury bonds. This is happening because there are fears about the muni bond insurers going under, which is pointless since muni bonds rarely default. In normal times muni bonds yield 30% less than treasuries. Normally hedge funds would step in and buy munis and short treasuries against them and eliminate this anomaly. But the hedge funds are being hit with margin calls as a global deleveraging unfolds. Hedge Funds call this kind of trade “buying a dollar for 70 cents”.

4) Here is another one. GE common is yielding almost double 2 year treasuries. The stock has fallen from $43 to $33 in 4 months and now yields 3.2% vs. 1.9% for notes and you get all of the future growth in GE earnings for free through stock appreciation. Jeff Imelt says that 10% revenue growth for 2008 is 'in the bank'. One opportunity for GE is in the fact that Los Angeles is expected to have power brown outs this summer and GE has a 40% market share in gas turbines.

3) The stimulus package has been passed by congress and is expected to add 0.7% to GDP growth this year. The $300 checks go out in May and will start being spent in June. By then the recession will be over so it will be useless in terms of heading off the current slowdown, especially if people just use the money to buy a Chinese made CD player. This is basically just a feel good program in an election year.

4) Wheat has been limit up every day this week for a total move of 15% to 1,150 cents a bushel. A global food shortage is developing as several rich countries like Brazil and China scramble for supplies. Poor countries in Africa can no longer afford to pay. This could be the year of food as a big trade.

5) A record $3.4 trillion is sitting in money market funds yielding close to zero. When the markets turn they will rocket because there is so much firepower available.

6) Another quiet day. No one doubts that this is anything but a calm between storms. One is increasingly hearing the term 'tape bomb.'