Dollar plunges to another low. U.S. inflation numbers worse than expected…which rising prices are hurting wholesalers and consumers alike. Chris Mayer with an update on the biggest untapped oil patch in the lower 48. In 2007, hedge fund managers earned billions.

The dollar dropped to a record $1.59 against the euro overnight — its worst daily performance versus the euro in over three weeks.

“Inflation in Europe jumped even higher than the previous 3.5%,” explains Chuck Butler, “hitting the 3.6% level in March. That’s the fastest pace of inflation in 16 years. The ECB isn’t going to go forward with a rate cut in May, or anytime soon, for that matter.”

By contrast, futures on the Chicago exchange still put the likelihood of a 25-point cut by the Fed on the 30th at 100%.

“It’s the official policy of the Federal Reserve to debase the currency,” Jim Rogers told Keith Fitz-Gerald in an exclusive interview published in the Rude Awakening this morning. “Washington has sent a very clear signal: ‘We want the dollar to decline. We’re gonna do our best to make it decline’…

“[Bernanke] and Greenspan together will probably bring [about] the end of the Federal Reserve. We’ve had two central banks in America that failed. This third central bank will probably fail, too, because of Bernanke and Greenspan.

“The Federal Reserve last week put $200 billion more onto its balance sheet of mortgages. Now I don’t know how big they can expand their balance sheet, but if they keep doing it, there’s only so much they can do. Maybe that balance sheet is infinite. I doubt it. And it can be said to be infinite; they just print money like Zimbabwe or someplace. But that has to come to an end, eventually…

“Well, everybody has to make their own decision. I’m trying to do what the Federal Reserve wants me to do, and I’m selling dollars… All Americans should…”

On cue, this morning’s wholesale and consumer prices show what the Fed’s policy doth reap. The producer price index (PPI) shot up much higher than expected, to 1.1%, in March — nearly double the median forecast from the Street.

Food and energy prices led the way: Energy climbed 2.9%, gasoline grew 1.3% and food rose 1.2%. The core PPI moved up to a yearly rate of 2.7% — the highest level of core inflation since 2005. But if you factor in food and energy, wholesale inflation is at 6.9%, a fraction below the 26-year high achieved in January.

On the CPI level, energy and airline tickets helped bring inflation for the everyday consumer up to over 4%.

We also note the Canadian, Australian and Norwegian currencies all enjoyed big gains yesterday, almost entirely fueled by oil’s stunning rise. Chuck and his crew at EverBank have put together a World Energy CD — indexed to the loonie, Aussie and krone — all of which should benefit from higher energy costs. This round of funding is exclusively available to you, a reader of The 5.

The U.S. stock market managed some small gains yesterday. Positive earnings from Johnson & Johnson and the Delta/Northwest merger pushed the S&P 500, Nasdaq and Dow up about 0.5% each. Record energy prices helped out utility and energy sectors, which clearly led the way.

This morning, we kick off the earnings season in earnest… with a surprise to the upside. J.P. Morgan beat Wall Street estimates in its premarket earnings announcement this morning. Of course, the news wasn’t exactly rosy… the bank posted a 50% drop in first-quarter income and revealed another $2.6 billion in mortgage-related write-downs. But earnings came in at 68 cents per share, 3 cents better than expected.

Couple that with good news from Intel and Coca-Cola and the U.S. stock market opened up over 1%.

U.S. homebuilders began construction on the fewest homes in 17 years during March, the Commerce Department admitted this morning. The coveted housing starts number came in at 947,000, down nearly 12% — more than twice the forecasted fall.

Year over year, starts are down 36% across the nation and in every region surveyed by the Commerce Department. Looking forward, building permits appear even worse. Permit applications fell 6% in March, down over 40% year over year.

Headlining the global food crisis, rice found itself another record high yesterday.

Futures in Chicago ticked up another 2.3%, to $22.67, per 100 pounds when the Philippines — the world’s biggest rice importer — put in a buy order for 1 million metric tons. That’s more than 50% of all the Philippine rice imports in 2007… clearly, the government is concerned about food supplies.

According to the USDA yesterday, only 2% of the Arkansas rice crop is in the ground. Arkansas, the biggest rice state in the U.S., had planted 31% of its crop this time last year. As Kevin reported yesterday about corn crops this year… too wet, too cold to plant.

Along with higher prices, “Here’s another concern facing the food exchanges,” notes Dan Denning, surveying the situation from Melbourne, “increased margin requirements.

“In one famous example, regulators shattered the Hunt brothers in the silver market in the early 1980s by raising margins so much that all but the most cashed-up speculators had to flee their long positions. When the highly leveraged buyers left the market, the futures price collapsed. The same is a risk for the corn wheat, corn, soy and rice markets today.

“One difference: The futures markets are much deeper and more liquid these days. Market manipulation by regulation may be harder to achieve, especially when it competes with the forces of physical reality. Raising margins would only drive out speculators.

“Most of what is driving the grain markets is real demand. Exporters are hoarding crops, shopping for higher prices or, worse, being forced by governments to sell product into the local market to satisfy the crowds in the streets. The fundamental problem is in the allocation of global resources. We have a lot of people on this old furry ball… and a lot of people are starting to wonder if there’s enough food to last for the whole dinner party.”

Gold is quietly creeping up the charts this week. The precious metal has slowly, but steadily added on about $40 this week, trading this morning for $945.

Oil jumped up to another record high this morning. Light sweet crude is now well into the $114 range, like yesterday, mostly on news of a weaker greenback.

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