Time-Tested Wisdom: For Commodity Bulls, 'Don't Fight the Fed' Becomes 'Don't Fight Beijing'

The big story in the week that was (besides the customary Black Friday trample-fests)? “Greece Part II: Eurozone sovereign debt crisis revisited.” As such, the Captain Obvious award goes to the NYT for pointing out that a bailout of Spain — were such even feasible — would test Europe’s finances. (Nah, ya think?) Funny, though, how the big driver often winds up being the thing less talked about. And right now, there is very little focus on what’s happening in China. The old Federal Reserve rule is “three steps and a stumble,” meaning, when the Fed hikes rates three times, look out below. (Basic rationale: As interest rates go up, margin and loan service costs go up. Rate-of-return hurdles go up. Yields on safe haven debt instruments become more competitive. All this happens with risk appetite in a ‘peaking’ stage, and the bloom comes off the speculative rose.) So if “Don’t Fight the Fed” counts as time-tested wisdom, how about “Don’t Fight Beijing?”