Jack the Pipper

China’s new fiscal stimulus package is receiving rave reviews across the board this morning. Bond prices lower, stocks higher, oil higher, gold higher and the dollar getting whacked–it’s déjà vu all over again for the risk appetite crowd.

Today is interest rate day! That is, the Bank of England and the European Central Bank culminate their most recent monetary policy discussions and announce changes to their benchmark interest rates.

…we are big believers that after following the chain of price action, sooner or later, it all comes back in some way to the rate of interest. Interest rates are the core of all things financial, though the link may be seemingly distorted at times.

November 4, 2008: Some of us might have been waiting for this day longer than others. Some of us may have been clamoring for it, while some of us may have been dreading its arrival. Either way, that day is here and a major change could be in order. That’s simply because …

Ebb in risk aversion means a flow of risk appetite by definition. And risk appetite may mean it’s time for commodities, which have been body slammed, to make a decent correction; maybe of the multi-week variety.

Does the ‘establishment of temporary reciprocal currency arrangements’ mean anything to you? Yeah, it kind of went by me in a blur the first time I read it. Basically, this has become one of the side shows for the Federal Reserve.

Buy the rumor of a 1% Fed Funds and sell the news? Hmmm….Maybe today’s better than expected US durable goods orders will neutralize that in here.

The conspiracy crowd is working overtime these days. Many “deep thinkers” among the gold crowd still spout conspiracy stuff on a regular basis to help explain why their beloved metal is not now sitting at least $2,000 an ounce.

Ahhh, let’s see … recent buzz words in the investor vernacular have been risky assets, subprime, inflation, decoupling, current account, globalization … and the list goes on. The newest buzz word to make the list: deleveraging.

Though we luckily have not had the experience, and the physical pain is obviously different, this move in the dollar today seems to us the psychological equivalent to being chomped on by a 20 ft. long white shark. Blam!