Before painting a cautious picture on the stock market rally since the March 9 lows, it’s important to point out that investors are getting ahead of themselves again as the global economy and corporate earnings remain stuck in the basement in 2009.

Since stocks hit an all-time high in October 2007 investors have been massacred buying into bear market rallies disguised as a bottom; over the last 18 months equities have staged three false rallies, including the current up-crash. The S&P 500 Index is now 20% above its March low.

Despite a rally over the last ten days following the shocking announcement that the Federal Reserve will spend $300 billion dollars to support Treasury debt, TIPS or Treasury Inflation Protected Securities continue to offer great value.

Global stock markets celebrated Secretary Tim Geithner’s toxic-asset plan yesterday scoring their best single-day performance in years and cutting this year’s losses to just 9% for the S&P 500 Index. The MSCI World Index is now down 10% in 2009.

In March, global equities are in the midst of their first monthly gain since December and their best month since December 2003, up 10.6%. The MSCI Emerging Markets Index is now in positive territory this year and is up 16% in March.

Crude oil prices recently hit a bottom in this bear market at $33.87 and prices are up 15% since the beginning of the year. That’s a bullish sign for commodity bulls who received a much needed price jolt last week following the dollar’s big decline. OPEC has also been busy cutting supplies, mainly Saudi Arabia and, to a lesser extent, Russia, a non-OPEC member.

But will depressed natural gas prices follow suit?

The global currency wars are gaining momentum this month on the heels of a new concerted attack by the world’s leading central banks to combat deflation.

The euro has gained 7% in March and has cut its losses to just 2% against the dollar in 2009 following sharper losses just seven days ago. The dollar has plunged this week on renewed inflation fears as the Fed grows desperate to grow credit expansion in an increasingly dangerous deflationary environment.

Following The Bank of England is not a good thing. No other central bank in the OECD faces a more daunting task to revive credit. The United Kingdom, for all intents and purposes, is effectively broke. Its financial system is largely insolvent, the pound has crashed and the government already owns two of the largest banks. Unemployment in February hit its highest levels since 1971.

Credit markets are starting to waffle again and that’s bad news for common stocks.

The last bear market rally off the November 20 lows also saw credit markets gain traction in unison with global capital markets. That rally, which died in January and saw the S&P 500 Index plunge to a 12-year low on March 9, was at least accompanied by a compression of credit yields or narrowing credit spreads.

Are emerging markets the new relative safe haven for stock investors?

Despite a regional market collapse across Eastern and Central Europe this year the MSCI Emerging Markets Index is down just 7% versus a 17% loss for the S&P 500 Index and a decline of 18.8% for the MSCI World Index of mature markets.

Nobody wants a strong currency. That’s the central theme over the last 20 years and especially since the emergence of the credit crisis and the ensuing global economic recession – the deepest since 1982.

Since the emergence of this credit crisis more than 19 months ago, the Japanese yen and the U.S. dollar have charged ahead vis-à-vis all foreign currencies. And over the last 12 months, both currencies are even higher against gold. Recently, the dollar began to rally versus the yen.