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Five Things You Need to Know for Monday


What you need to know (and what it means).


Five things you need to know to stay ahead of the pack on Wall Street.

1. In Japan, it's just like old times.

Japan's benchmark stock index, the Nikkei 225, tumbled 2.8 percent Monday, its biggest one-day drop since January.

  • The Nikkei 225 index fell 489.56 points to 16,914.40 points, the lowest close since March 28.
  • In percentage terms, it was the biggest drop since Jan. 18, when the market fell 2.9 percent.
  • According to Reuters, some were concerned by a lower house by-election on Sunday, when an opposition candidate beat one backed by the ruling Liberal Democratic party (LDP), raising concerns about political uncertainty.
  • Prime Minister Junichiro Koizumi, who is popular with foreign investors, steps down in September.
  • Minyanville Professor Kevin Depew also noted the long-term technical precariousness of the market given a cluster of DeMark TD-Sequential and TD-Combo monthly sell patterns on the Nikkei 225.

"On this monthly chart, the 13s (in blue) are DeMark TD-Sequential signals. Note the buy signal in 2002 and the recent sell signal. The 13s (green and red) are TD-Combo buy and sell signals, respectively," Depew said.

2. Know Your Currency Events!

While the G7 on Friday seized the opportunity to rattle China's cage about the yuan, the governor of the People's Bank of China insisted it's the dollar that poses the greatest risk to the global economy. Minyanville's Five Things You Need to Know... presents: Know Your Currency Events.
  • Question 1: The U.S. would like to see China boost the value of its currency because:
    a. A stronger yuan would help reduce the U.S. trade deficit with China.
    b. It would make it easier to get rid of all these increasingly worthless dollars.
    c. Two words: Dim Sum
  • Question 2: China is reluctant to increase the value of the yuan quickly because:
    a. They prefer gradual currency adjustments to balance competing interests and ensure that the financial sector is strong enough to handle them.
    b. They don't need to and no one can really do anything about it.
    c. Too much hard math involved.
  • Question 3: The U.S. is considering branding China a "currency manipulator." A currency manipulator label is:
    a. A designation from the U.S. Treasury Department that could lead to economic sanctions.
    b. A way to put off making hard decisions about our own contributions to the trade deficit.
    c. A short con involving sleight of hand and a last second substitution of currency lower in value than victim believes she is receiving.
  • Question 4: Today the Yen surged to a five-month high against the U.S. dollar because:
    a. The G7 urged Asian countries including China to allow their currencies to strengthen.
    b. China is Japan's largest trading partner and a stronger yuan may boost Chinese imports.
    c. Kankei naidaro!
  • Question 5: Which Central Bank recently announced forex adjustments intended to diversify away from U.S. dollar holdings:
    a. Qatar
    b. UAE
    c. Sweden
    d. Russia
    e. China
    f. All of the above

3. Pennies From Heaven

The price of copper is now nearly $7,000 a ton this morning, a new record high.
  • Copper, used in wiring and construction, hit a new record of $6,930 a ton at one point this morning.
  • Copper is up about 57 percent this year and fivefold from its level just below $1,400 a ton in November 2001.
  • Over the weekend 400 additional Mexican miners joined a nationwide strike, while workers at the Lomas Bayas copper mine in northern Chile will vote on Wednesday whether to strike Canada's Falconbridge Ltd.
  • Meanwhile, save your pennies. Although pennies were once made of pure copper, today they are copper plated with a copper content in the parts-per-million range.
  • However, while the copper content is negligible, pennies are made almost entirely of zinc, and zinc prices are also at record highs.
  • According to the New York Times, it costs the U.S. mint more than .6 cents to manufacture a penny. However, due to zinc and copper prices, the cost to the U.S. of materials in the penny is now at .8 cent.
  • This means the U.S. government is losing money on every penny.

Penny for your penny?

4. Don't call us, we'll call you.

Microsoft chairman Bill Gates said Vietnam has the potential to develop into an outsourcing center similar to India.
  • Visiting Vietnam over the weekend, Microsoft's Bill Gates said Vietnam has the potential to develop as an outsourcing center similar to India.
  • During the visit Gates met Vietnamese Prime Minister Phan Van Khai and President Tran Duc Luong in Hanoi before going to Hanoi University of Technology to take questions from students there.
  • Thousands of students, some of them perched in trees and others on balconies, lined up outside the auditorium at the Hanoi University of Technology to try and catch a glimpse of Gates.
  • In February, Intel announced it would build a a plant in Vietnam.
  • "Vietnam should also focus on software development, outsourcing. There's an opportunity to do call centers," Gates said, according to The China Post.
  • On Saturday MSFT signed an accord with Vietnam's Ministry of Finance in which the ministry would become the first state body to use fully licensed software throughout its entire information technology system.

5. Love Stinks!

The Museum of Broken Relationships is now open in Zagreb, Croatia.

  • A museum dedicated to broken hearts has opened in Croatia.
  • Drazen Grubisic and Olinka Vistica, who used to be a couple, decided to set up the museum after consoling friends over their failed romances.
  • The museum boasts love letters, engagement rings, empty liquor bottles left behind after a failed romance and even an artificial limb donated by a war veteran who fell in love with his therapist.
  • In one corner is a "confessional", a box with a computer and a microphone behind a curtain where visitors can record how they feel about their lost love.
  • Each piece in the exhibit is accompanied by a note from the donor, explaining its origin and significance.
  • What is not in the exhibit... yet, are the disgusting cookies I've saved these many long years (20 in fact); cookies given me by a girl named Amy to allay her guilty conscience.
  • Every now and then I'll take the cookies down from their special "hate place" in the top of my closet and open the box, letting the bitter, salty tears of my pain slowly season them, melting them down into a batter called revenge.

I love you.


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Copyright 2006 Minyanville Publishing and Multimedia, LLC. All Rights Reserved.
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The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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