“Most Recent Post” link stopped working.

Using latest WP, with the theme Activate 10.

This theme has a “Recently from the blog: ” link at the top of the page which worked fine until around the time I changed permalinks to “Date and Name Based”.

This is the code:

<div id="contentlatest">
<ul><li>Recently from the blog: <?php $recent = new WP_Query("cat=1&showposts=1"); while($recent->have_posts()) : $recent->the_post();?>
<a href="<?php the_permalink(); ?>"><?php the_title(); ?></a><?php endwhile; ?></li></ul>
</div>

Can anyone tell me why it stopped working? Site: http://www.ejacunation.com/