NDX daily: w4 of wC (red) should end at 1479.84; w5 of wC to start shortly.

Excellent article out of the Trilateral Institute, Inc. (Sankyoku Keizai Kenkyusho), a private think tank in Tokyo.

Long DXH4 (US Dollar Index Futures) @84.97

Given the DXH4 (MAR 04 DXY)monthly 5th wave move lower (jan-feb 04), I believe gold is undervalued relative to the USD; hence, either gold gains or the USD strengthens. The monthly price structure along with governing monthly and weekly static cycles indicate a significant turn is in store for the USD. I do not think the USD will see the 80-82 level many strategists are forecasting. The US presidential election will be won or lost in the international currency markets. This will become more apparent as the Fall approaches.

There's been a lot of talk lately about the "J curve". The "J curve" is a theory that says a country`s trade deficit will initially worsen after its currency depreciates because higher prices on foreign imports will more than offset the reduced volume of imports in the short run. I believe the theory is valid, but I also think that since the Yuan is pegged to the USD the "J curve" is best left to academia in this instance.
As I've said over and over, the only real "assets" to speak of left in the US are dollars which are printed for free and the consumption engine fueled by ever increasing mountains of debt. That's hardly the description of a strong, sound economy as it's portrayed by the financial cheerleaders in the US. (C.Harris)

Treasury's Trip to Beijing May Not Budge Peg: David DeRosa
Feb. 15 (Bloomberg)-- China's defense of its fixed exchange rate regime may be cracking -- a bit: Beijing is preparing to receive a delegation from the U.S. Treasury within weeks to discuss the yuan's future.

Diller has created immense value for his shareholders over the years by making strategic acquisitions. He is also one who tells it like he sees it.

Diller has said he expects to make fewer acquisitions this year. Prospective sellers of Internet commerce businesses are asking more for their companies than they're worth, Diller said. He compared current stock market valuations of Internet companies to the high valuations of the late 1990s.

"We are on our way into a new bubble, and bubbles eventually get pricked," Diller said. "This growth will also produce an endless number of brainless ideas, short-term greed, ridiculous valuations, investor speculation and all the other lovely horrors we've so quickly forgotten."

China setting up strategic oil reserve

Last May, China's State Council set up a strategic State Oil Reserves Project, but only made the decision public late last year.

Total price tag: at least US$725 million for the four locations, scheduled to be completed by 2010...and will hold 70-75 days worth of oil, probably much of it imports.

China may well see another financial advantage in establishing an oil reserve, though it would be sensitive to negotiate and implement. If China were to stock the reserves with foreign oil - a big "if" in itself, as it raises questions not just about the price of the deal but also about the politics behind it - it would be spending some valuable foreign currency to buy the oil. This, in turn, could reduce pressure on Beijing to revalue the yuan. The United States especially wants China to revalue its currency upward, arguing that the current rate of valuation is too low and thus Chinese goods are underpriced in world markets - to the detriment of competing US sellers.

Subtle Press Release or Shot Accross the Bow for Agency Mrkt?

The Federal Reserve Board on Thursday announced that it intends, beginning in July 2006, to require Reserve Banks to release interest and redemption payments on securities issued by government-sponsored enterprises and international organizations only when the issuer's Federal Reserve account contains sufficient funds to cover these payments.

[...]the rising level of intraday credit in recent years has prompted a reassessment of this practice [...]

Japan Just Can't Switch to Gold - Yet.

There was an occasion in 1996 when former Japanese prime minister Ryutaro Hashimoto pondered out loud during a visit to New York about what might happen if Japan were to reduce its (even then) large holdings of US dollar securities. Washington appeared to get the message and the severe upward pressure that the yen had been subjected to eased off. Mr Tanigaki, according to some schools of thought, may have been issuing a similar veiled threat ahead of this week's G7 finance ministers' meeting in Florida.

The fact is, however, that at some time the threat of Asian governments running down their colossal dollar holdings (which constitute the bulk of the US$1.9 trillion of official foreign exchange reserves held in Asia) is going to crystallise. It could happen if Japan's economy is moving, as some economists suggest, beyond total export dependence towards a broader-based domestic recovery. Or it could happen if rising US interest rates stall growth and demand for imports. But happen it surely will and reshaping the dangerous structure of mutual dependence between East Asia and the US should be top of the agenda for the G7.

It doesn't depend on whether or not Friday's number is good or bad, disappointing or not. This time around, any number Washington puts out could be taken the wrong way.
The problem is simple: We are in one of those positions that is technically called a damned-if-you-do, damned-if-you-don't bind.
If Friday's number is another disappointing one - say, with only 150,000 jobs created - then investors will begin to worry that the economy is starting to flatten out again.
Last week's announcement that the nation's gross domestic product grew at a disappointing 4 percent annual rate in the fourth quarter doesn't help. (And that number was especially bad if you look behind the curtain; a good hunk of the GDP gain came from a fortuitous and inexplicable reduction in the quarter's inflation rate.)
Conversely, if the January jobs figure is too strong, then the financial markets will start a brand-new line of worry - that the Federal Reserve will soon have to raise interest rates. (nyp, j.crudele)

Impulsive wkly structure is nearing completion. Exit long position @ 11.05, await w2 corrective move.
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On Jan 28, Japan's finance minister, Sadakazu Tanigaki, said that the Ministry is considering changing the composition of its $674 B in forex reserves which are predominantly held in US Ts. In the words of Denis Gartman: "the mere mention of that fact is the ominously bearish of the USD...is ominously bearish of US debt." Mr. Tanigaki followed these sharp remarks by mentioning Japan's interst in increasing its gold holdings as a reserve asset.

At 765.2 tonnes, Japan's official gold holdings amount to only 1.5 per cent of reserves, according to the World Gold Council in London. Likewise, at 600 tonnes, China's gold holdings represent only 1.9 per cent of its official reserves. For Asia as a whole, gold holdings of some 2,000 tonnes amount to only 2.1 per cent of total reserves. In contrast, the US has 59 per cent of its reserves in gold; France, 57 per cent; and Germany, 47 per cent.

These comments were not made on the fly; they were planned and announced on a global stage. Conveniently, Mr. Tanigaki seismic statements received v. limited popular media coverage in the US.