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.