Treasury Secretary Geithner, speaking from Tokyo, said that he wants a strong dollar and that the United States is determined to bring budget deficits down.

Mr Geithner has made this statement several times in the past. Yet, this year the dollar has fallen 7.6% and hit a 15 month low of 74.889 on Wednesday.

You are probably wondering why his words are being discounted. The dollar keeps falling. Let's look at the underlying conditions in the US economy that are working against a strong dollar.

Geithner cited unemployment as one factor. He said: "Unemployment is really very, very high, exceptionally higher in the United States. It is still rising. It's probably going to rise for a bit longer, until you see a longer period of growth take hold."

Who is going to crackdown on the speculators? The agency responsible for supervision of the commodities markets is the Commodity Futures Trading Commission (CFTC.)

If you remember, last year the spike in oil prices to $147.00 per barrel was done through speculation in oil futures contracts. A futures contract gives the trader to right to bet on the prices of various commodities, on whether they will go up or down. Contracts usually last for three months, at which time the longs and the shorts are paired down to zero, leaving the speculators out of the final trading. However, the speculators simply move their positions to another forward contract, keeping their positions in place.

The rub has been on the concept of "position limits." In most commodities the CFTC imposes a limit on the number of contracts that a single person or firm can hold. The real bone of contention is that the CFTC does not impose limits on oil or oil products contracts. That has been left up to the various exchanges.

This morning, the U.S. Federal Reserve is expected announce that some banks will be allowed to repay the money lent to them under the Troubled Asset Relief Program (TARP). Some of the banks expected to receive approval are Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), American Express (NYSE: AXP), Morgan Stanley (NYSE: MS), State Street (NYSE: STT) and U.S. Bancorp (NYSE: USB). All of these banks have expressed interest in repaying the government.

What is interesting is that there will be yet another Czar joining the White House, a "Repayment Czar," (what is the deal with the media's fascination with Russian royalty?) or as the administration will call the position, the "Special Master for Compensation."

At first we thought that it was rather unusual that the US Treasury Secretary, Geithner, would make a special trip to China. What were the reasons for his trip? The purpose of the mission became clear when Geithner announced that the dollar would remain as the world reserve currency. There had been a lot of scuttle but about replacing the dollar as the world reserve currency, but some of this has been put to rest with the support of Chinese backing.

As usual the Chinese remarks were guarded and a bit fuzzy. Guo Shuging, Chairman of China Construction Bank and former head of the country's foreign exchange administrator said: "In the short term, I don't think we can find another currency to replace the US dollar." He also said, "the US dollar is the main currency because their economy is number one in terms of competitiveness, in terms of innovation."

Reports have surfaced from Wall Street about the relationship between the Federal Reserve Bank of New York and Goldman Sachs (NYSE: GS). Before we go into the relationship, let's take a look at what has taken place at GS thus far.

Late last year, GS received rather quick approval to become a bank holding company and received an injection of $10 billion in capital soon after the approval. There is nothing suspicious about this relationship, until you learn that the New York Fed's chair Stephen Friedman was on GS's board at the time -- and held a large amount of GS stock. Flat out, this is a violation of the Fed's policy.

Four weeks in a row of gains were met with at least the first day of the week having sellers win over buyers. The good news is that the market came back at the end of the day. We might have closed up if we had another hour of trading on the clock.

Geithner's comments about running out management and boards of directors at banks which need capital did not help, nor did an influential banking analyst coming out with very negative coverage of the sector at a new firm. Here were today's closing bell levels:

Dow 7,975.85 -41.74 (-0.52%)
S&P 500 835.48 -7.02 (-0.83%)
Nasdaq 1,606.71 -15.16 (-0.93%)

Top Analyst Upgrades
Top Analyst Downgrades

So far the U.S. has committed $12.8 trillion to bailing out Wall Street. Does this mean that Wall Street CEOs made mistakes? Apparently not. Because if it did, the Wall Streeters who cost taxpayers all that loot would be out of their jobs.

A few have moved on -- consider Merrill Lynch's former CEO Stan O'Neal, who, after leaving the investment bank with a then-record $2.24 billion loss, received a "kick in the rear" amounting to a $161 million retirement package. (O'Neal is just one of the Harvard MBAs whose destruction of the global economy is prompting some navel gazing at HBS.)

Most, though, are still at their desks, gamely calling the shots. Yesterday, Treasury Secretary Tim Geithner suggested it could be time for that to change.

TheStreet.com's Jim Cramer says it'd be easy to follow the herd and doubt the staying power of this rally, but that's not his style.

People think I am nuts . . . even more than usual. All they can talk about at the cocktail parties and the lunches and on the Street is how bad things are. They want to hide in gold. They want to hide under the bed. They think that every move is false and every rally must be sold. The negativity is so thick that even my closest friends think that I am being wishful about the turn. Oh, and heaven forbid there would be one positive article in The Wall Street Journal about this market. Just one!

Two weeks have passed since I posted Is the stock market spring loaded? Could it move 3,000 points higher now? and the Dow Jones Industrial Average has climbed about 750 points finishing yesterday at 7660. That is after a day in which it went down 116 points giving up some of Mondays gains.

There is an old adage on Wall Street that simply states, "Don't fight the Fed". It is has been referred to and commented on for years and we are seeing it in action again. We saw it last week when Ben Bernanke the Federal Reserve Chairman was going to speak and some wondered what he might be able to do to help the ailing economy, since the adage, in general, refers to interest rate movement.

Today saw a monster rally brought on by Tim Geithner's Treasury plan to rid banks of toxic assets. Then a much "less bad" bit on the existing home sales showed a gain of more than 5% because so many are distressed house sales. And now there is a new issue to consider: The bears have to be worried as key upside technical resistance levels were taken out in the last hour of trading.

Here are the unofficial closing bell levels:

Dow 7,775.86 +497.48 (6.84%)
S&P 500 822.92 +54.38 (7.08%)
Nasdaq 1,555.77 +98.50 (6.76%)

Top Analyst Upgrades and Downgrades

After almost four months of trading in a dominant sideways pattern (except for the Nov. 20-21 bear trap), the government now provides some hope of "stimulus" and, just as important, a new bank bailout plan. So, despite the fear readings from the public, more savvy investors with lots of cash appear ready to put some of that money to work.

On Friday, I spent some time comparing the similarities of the 2002-'03 bottom to the current chart patterns of the major indices and the CBOE Volatility Index (VIX), concluding that it looks like the conditions are present to get a meaningful rally underway.

If you agree that the market is poised for a move higher, the question is, "what sectors and stocks should I buy?"

The Fed's putting pressure on various exchanges to set up a clearinghouse for credit default swaps. That's the "news" this morning. News is in quotes because, first, the exchanges all want to do this, and they have wanted it for months. They need the revenue. Second, we want more than one exchange so there is competition in pricing and we don't want a sweetheart deal by a government so prone to sweetheart deals that I want to vomit every day I come to work.

Third, this is a regulatory issue and it should be done by some superbody - but please not the easily lobbied-Commodity Futures Trading Commission, which will make you put no margin down because then the fees will be huge from trading. And please not the Securities and Exchange Commission, which doesn't understand markets and has blessed a world where these are under deep cover.

Frankly, as much as I want a clearinghouse on this stuff, I don't think it is possible with these sets of regulators to get a fair one. They are just too easily lobbied by the bad guys to do the wrong thing.

And who would be the worst at this? Tim Geithner and his merry band of "everything we do is right" Federal Reserve folks. I was listening to the TV Thursday and some host was asking some guest how she thought Federal Reserve Chairman Ben Bernanke was doing. She said "he's done a great job." And I found myself thinking, you have to be kidding, you can't possibly believe that, how could anyone think this guy has done a great job?

Anyway, he and Tim "Mr. Let-Me- Call-the-Media-and-Get-a-Good-Story- About-us-Because-I am-Savvy-and-I- Know-How-They-Care-About-the-Call- Back-and-Will-Praise-US" Geithner" (long and deserving hyphenated nickname) would be without a doubt the worst two to be involved in this credit default swap market because they don't play dirty and don't know how the game works. One of the reasons we are in such a jam is that SEC Chairman Christopher Cox has huge faith in the market and Bernanke has huge faith in the power of debate with people like Dick Fisher, the totally discredited Texas Fed man who was saying that inflation is the issue and it is out of control as the greatest wave of deflation overwhelms us since 1932. Fisher's an arrogant and erudite one-man wrecking crew of this economy.

If the Fed is pressuring for these exchanges then we are really in trouble.

I wonder if they even realize that Oct, 21, the day of the Lehman reckoning when we give the Wall Street gangsters their pay off on their hit jobs on Lehman, will cause the federally owned AIG (NYSE:AIG) write gigantic checks and will also reveal who guaranteed this stuff. It will most likely be lots of institutions the Fed doesn't understand or doesn't know.