Economy

Very ugly economic news today as initial claims were the bright spot. Despite the decline in weekly claims the 4-week average of 361K is just 1K below the level at the start of the 1990 recession and doesn't suggest a rebound in payrolls after the January decline. The index of leading economic indicators showed a fourth month of decline and a cumulative 6 month decline of -2% -- both exceeding the movement used to signal an oncoming recession. The Philadelphia manufacturing index fell to the lowest level since just before the 2001 recession as expectations were for a partial rebound. Together with the sharp February drop in the NY state manufacturing index they bode poorly for the national ISM index.

Banks are tightening credit in the face of defaulting sub-prime loans, credit card defaults and car loans going bad and the Fed hasn't been able to do much about it. Lowering the interest rate feeds inflation without having any effect on what banks and credit card companies are charging in fees and interest.

Oil futures went to $101 a gallon yesterday, the dollar is falling. Go long on gold stocks and short financial sector on rallies.