The change of heart by investors who now seem willing to look through the windshield rather than the rear-view mirror is having a negative impact on the dollar, down across the board today as the theory of returning risk-appetite takes center stage. You might call it the Geithner glitch or you could be even more transparent and say that the information void apparent at the Treasury Secretary’s inaugural speech is slowly populating with informational substance. The reaction to his plans for making federal cash available to private investors coupled with his high hopes for reviving trading in mortgage-backed assets on banks’ balance sheets appears to be better received. His remarks on PBS yesterday evening haven’t upset Tuesday’s leap of faith in stocks inspired by remarks from Citigroup’s CEO.

Admittedly, it does feel that a stock market rally seems overdue in this harsh macro-economic climate, but it feels equally uncomfortable to pin an end to the bear market on signs of revenue stability and return to profitability at Citi., where those same assets remain on the balance sheet. The remarks too contrast the far more conservative or cautious stance taken by Swiss-giant, UBS today as it reported larger 2008 losses than earlier thought.

But the emphasis on optimism today also extends to China, where the same schism between good news and bad news was one by optimists. Investors ultimately bought higher-yielding and riskier currencies predisposed to do well out of global recovery and took issue with the dollar. The Aussie rose to 65 U.S. cents following an implosion of Chinese trade data, which showed a trade surplus one-eighth of its previous amount. Both exports and imports collapsed by around one-quarter as global demand dried up resulting in lesser need to bring in raw materials.

However, rather than dwelling on the morose state, investors jumped on the results of the November Chinese stimulus plan, which sired 28% more new domestic projects. Impressive enough was a tripling of investment on railway investments and a doubling of spending on agricultural projects. Investments in coal-mining jumped 60% while $35 billion went into new energy-related projects. All of this spending comes from within Premier Wen Jibao’s spending plan aimed at maintaining 8% GDP growth across 2009. And understandably so as the trade slowdown, inspired by the American consumers’ current preference for saving, has put some 2 million Chinese workers in Guangdong province out of work. One newspaper estimates that 20,000 small and medium sized businesses have gone to the wall since the plan started.

Investors are fatigued by the bad news. Everyone knows it’s bad and it’s equally hard to find an optimist who claims to know the way out of here outside of the uncertain path of massive government spending. Even then, reviewing the performance of the British pound as the authorities step up to the plate indicates that are designed to deal with the onslaught of bad news fails to reveal the same willingness to play the optimist.

We appear to have shifted emphasis suddenly from fear of the known to acceptance that this seemingly can’t get any worse. Earlier today, both Germany and Britain announced factory orders and manufacturing data far, far worse than analysts predicted. But no one cares. The emphasis is now on the performance of the ultimate leading barometer, which is global stocks. What we need to confirm this folly is a rise in the value of the euro against the dollar to $1.30. Only then will the world definitely be on the mend!