Not too long ago it seemed that everybody loved China.  It was a panacea, a magic bullet, the answer to every question. How can the US avoid recession? China. Why are the stock markets racing higher? China. Why is oil over $140 a barrel? China. You may have noticed that all this cheerleading has gone very quiet, very quickly.

Currencies continue to rally…  More Stimulus…  Data shows more rot on the vine… And Now… Today’s Pfennig!

MSCI world equity index up 0.9 percent at 192.09, Hopes for interest rate cuts cushion economic gloom, Government bonds rally; oil rises from 3-1/2 year low

Trading Theme returns…  Automakers’ bailout vote today…  Not using all your arrows…  Housing Starts go back to 1959! And Now… Today’s Pfennig!

Bank of England governor Mervyn King said Wednesday that dangerous deflation is opening a door for further interest cut rates.

Fear of a global recession is quickly becoming reality as world markets have lost $10 trillion in value in the month of October and the U.S. economy almost certainly contracted in the third quarter.

Actions taken by the Federal Reserve to calm financial markets and ease the housing crisis are working, a US government official claims.

“Markets appear to be gaining confidence and the availability of credit has improved modestly,” Clay Lowery, the Treasury’s assistant secretary for international affairs, told Bloomberg. More from that story:

The Fed’s interest-rate cuts and a government economic stimulus package have helped to ease market turmoil and support consumer spending, [Lowery] said.

A few weeks ago in my blog, I wrote about how the dollar was destined to rally. As I expected, the dollar went on to rally two and a half cents (pretty good in the FOREX world). But will the dollar keep its rally going? It’s doubtful.

Gold moved steadily higher from the overseas markets straight through the New York NYMEX and Globex sessions on Monday, finishing at its intraday high of $874.00, up $17.20. Overnight, gold edged slightly higher in London.

The base metals were mostly higher on Friday. Copper was down in the pre-dawn hours, but took off once New York trading began and pushed steadily higher, only retreating a little after noon to finish at $3.8731/lb., up 8 2/3 cents.