Key News

• Loans to households and companies in Europe grew at the slowest pace in March since records began in 1991. (Bloomberg)
• South Korea posted a record current account surplus in March as imports fell sharply, the central bank said Wednesday. (Reuters)
• The European Commission said on Wednesday it was investigating whether China broke world trade rules with a new postal law that allows only a state monopoly to deliver domestic letters and documents [and read the contents before delivery]. The law approved on Friday allows only China Post -- also the industry regulator and pricing authority -- to deliver letters and documents posted within China, cutting out foreign firms such as FedEx Corp, TNT and United Parcel Service Inc. (Reuters)

Key Reports (WSJ):
7:00 a.m. Mortgage Applications Refinance Index: Previous: +7.7%.
8:30 a.m. 1Q Advance GDP: Expected: -4.6%. Previous: -6.3%.
10:30 a.m. U.S. Energy Dept Oil Inventories For Apr 24
2:15 p.m. Apr FOMC Interest Rate Decision

Quotable

"Admitting to a decidedly non-Keynesian bias, in my view the Chinese stimulus, subject to one important reservation, is a better plan than America's and that will enable China to recover faster than the other major world economies. The Chinese program, inasmuch as it is aimed at needed infrastructure improvements and although it may not have a dramatic effect in the short run, has a chance at being a net plus for productivity. And the mantra for China is still Deng Xiaoping's 'To be rich is glorious' rather than what appears to be the new American mantra, 'To be rich is to be a source of funds for the taxman.'  Business will want to invest in a country where the national policy is to embrace citizens who sincerely want to be rich."

                              Peter Treadway

FX Trading - Swine flu day three!
BLT sandwich lovers everywhere are rejoicing; those lock-limit down in bellies have likely lost their appetites; but it seems, on day three of the swine flu, stock and currency traders have definitely regained theirs. 

The dollar is being pummeled this morning (yen too) against the rest of the pack--major and emerging.  Even the Mexican peso is gaining ground on its neighbor to the north where infection is beginning to spread.

In the world of ebb and flow from risk appetite to risk aversion, stocks lead the way.  And though we were hinting the correlation between the dollar and stocks was starting to change a bit, we really can't say that any more.  The correlation is back and seemingly (given our unscientific approach) as tight as ever.  Below is a chart showing the relationship between the S&P 500 futures and the US dollar index on a 240-min basis; the yellow area on the left showing some divergence, the green area on the right showing the dollar index inverted (the red line; inverted to show the visual correlation) is back in tune with stocks i.e. higher stocks and lower dollar.

US Dollar Index Inverted (red line) vs. S&P 500 Futures (black line) 240-min:

To sum it up: If you think stocks will avoid the flu--sell the dollar!