Jack the Pipper

The World Bank says contraction will be greater than expected; the global economy will slow by 2.9% rather than 1.7%.

Some days I struggle for things to rave or rant about in this morning missive. Often, after bleeding at the keyboard for an hour or two, something seemingly worth saying pours on to the screen; but there are those days when only the keyboard is stained.

Since I penned my Comdol falling off a BRIC wall piece the other day, the commodity currencies and oil have of course rallied nicely–they didn’t follow the plan. But, hope springs eternal in the world of investing, and hope also usually gets one into trouble … as we know.

The correlation between stocks and currencies is working; risk-appetite at its finest. But say we didn’t have this connection … say a 0.023% rise in the S&P 500 didn’t equate to the same 0.023% rise in the Australian dollar or euro or whatever.

If you get a chance, we think Martin Wolfe’s piece in the FT today is worth the read, as it compares where we are in this global recession relative to where we were this time during the great depression.

If I happened to know the German national anthem I’d likely break out in song right now before I finished typing up this piece. Oh, by the way, did you hear that German investor confidence blew past expectations in a sign that the recession is coming to a close?

Soaring unemployment in Europe, with still huge banking exposure, rising political tensions, fiscal concerns among the PIGS, a little country called Latvia that may be the canary in the coal mine for its Eastern European neighbors so similarly afflicted

The numbers are staggering…really incomprehensible…it’s the kind of stuff that if you made it up no one would believe you…I’m talking about the amount of money both the US and European Union have committed to this crisis:

Imagination inflation – a.k.a. imagiflation — is what’s needed in order to understand price action these days.

We were very much warming to the idea that most of the bad news seemed to be in the dollar–much of the key points posted above i.e. if we know it and you know it then it should already be in the price.