• A slew of headlines are focused on Japan.

"One last thing."

 --Lt. Columbo

These headlines just came out:

U.S. Treasury Will 'Closely Monitor' Japan's Currency Policies 

U.S. Treasury Says China Intervention Appears to Have Resumed 

U.S. Says Japan Should Refrain From Competitive Devaluation

It seems that the risk of a currency war is escalating now. If a 2% inflation rate in Japan leads to a 120 yen -- which is probably a necessary outcome -- the European economies and company profits seem particularly exposed. Even Germany's export growth would likely be in jeopardy -- big time.

I would add: Note the irony associated with the U.S. telling Japan they are printing too much money and that we are monitoring their easing policies!

• I am leaving early today as I have another dog emergency.

Enjoy the weekend and thanks for reading my diary.

• Today we witnessed a dramatic decline ($60+/oz) in the price of gold. 

More than a year ago, I wrote about the price of gold. My conclusion was that gold doesn't produce profits and, as such, fails to provide a stream of income, so it's hard for me to estimate its intrinsic value (and next to impossible for me to invest in or trade it).

In light of this week's sharp drop, which began with Goldman Sachs' downgrade on the asset class and has ended with the possible sale of Cyprus' stash, here are my previous observations in "Fool's Gold."

The second major category of investments involves assets that will never produce anything but that are purchased in the buyer's hope that someone else, who also knows that the assets will be forever unproductive, will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century ...

This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce -- it will remain lifeless forever -- but rather by the belief that others will desire it even more avidly in the future....

The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative.

-- Warren Buffett, 2012 Berkshire Hathaway letter

In theory, gold is a great asset class in a world of too much cowbell, where fear is a constant and the integrity of most currencies is waning (as an outgrowth of addressing fiscal imbalances with monetary solutions).

As I once wrote about gold, however, there is no way to calculate intrinsic value. When it drops by $100 or $200 per ounce, an investor has little bearing as to whether the precious metal is cheap and at what price level it provides intrinsic value.

As Oaktree Capital Management's Howard Marks has written, gold is a lot like religion. In religion, you either believe in God or you don't. In the gold market, you either believe in gold or you don't.

In essence, the gold market is a state of mind. It neither represents a corporate franchise that increases over time as profits are earned and retained -- such as, say, Procter & Gamble,  with a protected moat -- nor is it a productive asset.

On the latter point, gold doesn't produce profits and, as such, fails to provide a stream of income.

Its future price is simple dependent upon someone willing to pay more for the asset class compared to its price today.

As I said back then, the bull market in gold has stalled, and it might not return for a while.

• I am butting heads with Mr. Market.

Mr. Market holds up remarkably well against the deteriorating backdrop, but I am staying the course.

• Here is a brief recap of my investment outlook.

To date in 2013, the world's central bankers have seemed to repeal the laws of investment gravity.

The stock market this year has risen based on the growing confidence that global easing will trickle down and improve regional economies around the world.

Unfortunately, just the opposite is occurring, as (particularly in the U.S.) more cowbell is beginning to have a negative impact (by robbing income from the savings class). European economies' recoveries have also failed to meet expectations.

Nevertheless, the gap or schism between the rising stock market and the visible deceleration in the rate of global economic growth has been widening in a more dramatic and conspicuous fashion over the past several weeks.

Indeed, despite the rising challenge to S&P 500 profits, the U.S. stock market this week has had its best four-day performance in 2013.

P/E multiples have surprisingly expanded this year, while the outlook for profits has deteriorated.

Whether it is the weakness in the most recent U.S. ISM release, a fall in consumer  and small business confidence, disappointing retail sales, a sharp drop in the Citigroup U.S. Surprise Index (now down 21-plus points in April), worsening EU economies or any of a number of other factors, global growth is slowing to a rate that will jeopardize ambitious U.S. corporate profit forecasts projected by the consensus.

And the recent broad drop in commodities, which has intensified today, seems to be endorsing the notion of much slower economic growth around the world.

In most areas of corporate America, there is little in the way of pricing power.

A chill in first-quarter earnings reports is increasingly visible -- Oracle (ORCL), J.B. Hunt (JBHT), Harris Corporation (HRS) and so on -- even during a first quarter in the U.S. that will likely exhibit +3% real GDP.

What will happen to earnings when the rate of growth in domestic economy halves?

• Here are some short ideas for a slowing global economy.

Some short ideas for a slowing global economy might include banks, Berkshire Hathaway (BRK.B), Danaher (DHR), Henry Schein (HSIC) and Caterpillar (CAT).

• Deflation spreads throughout a number of asset classes.

It should be emphasized that the chill of deflation is running through a number of assets (besides gold) -- and that includes copper, bonds, oil and more.

• The University of Michigan Survey of Consumer Confidence Sentiment missed consensus forecast.

Below is a long-term look at the University of Michigan Survey of Consumer Confidence Sentiment, which, similar to disappointing retail sales, missed consensus forecast.

University of Michigan Survey of Consumer Confidence Sentiment

Source: Bloomberg

View Chart »View in New Window »

• The precious metal's drop has been fast and furious.

Today's gold drop, likely reflecting growing signs of deflation, is remarkable in its magnitude and quickness of decline.

Gold Spot

Source: Bloomberg

View Chart »View in New Window »

• It stinks!

Breadth as of 11:00 a.m. EDT:

• S&P 500 -- 82 advancers to 412 decliners
• NYSE -- 306 advancers to 1,512 decliners
• Nasdaq -- 529 advancers to 1,471 decliners
• Russell 2000 -- 322 advancers to 1,500 decliners

Volume on the S&P is 5% higher than the past 10-day average, 2% higher than the past 30-day average and 4% lower than yesterday's volume for this time of day.

• Let's review.

My look back at the week's daily diary highlights borrows its title from a popular 1960s BBCcomedy show hosted by David Frost.

I hope this relatively new column helps put the market week into perspective.

I began the week with "One Shining Moment," which I enjoyed writing. In my opening salvo, I discussed how we can learn investing lessons from 1983 North Carolina State Wolfpack Championship basketball coach Jim Valvano's principles. Next, I highlighted my largest longs and shorts and the bull market in complacency - illustrated! The weakness in Citigroup's (C) shares and the Chinese stock market should get bullish investors nervous -- as should the continued narrowing of the market's advance. Finally, I asked, "Will J.C. Penney Become a Penny Stock?"

On Tuesday, I started with my "Levels" column, which highlighted buy/short levels for 82 stocks I cover. I then shifted to an analysis of small business confidence (primary jobs creators in the U.S.) and explained why this sector will likely be an economic headwind throughout 2013. In "Banks to Bump Against a Barrier," my focus shifted to the likely net interest margin compression facing the banking industry. (Note: JPMorgan Chase's (JPM) just-released net interest margin in first quarter 2013 fell to a post-recovery low of 2.83%.) In "French Toast," I underscored the developing economic weakness in the EU, which is spreading from the southern peripheral countries to France. Speaking of Europe, "DAX Is Lax" documented the weakness in the German stock exchange -- lower highs and lower lows are down on the year. In "Let's Go to the Charts," we looked at the punk performance of restaurant stocks (something that I warned about last fall). My analyst Sebastian got steamed! Finally, I recommended viewing Kyle Bass's take on Japan.

On Wednesday, Fastenal (FAST) reported that first-quarter average daily sales (punk) suggest the trajectory of domestic growth might be disappointing and overrated. In "Fool's Gold (Part Deux)," a Columnist Conversation post, I explained why I plan to avoid the precious metal. I am still bearish on U.S. bonds, and I suggest that buying ProShares UltraShort 20+ Year Treasury (TBT) anytime the 10-year yields 1.7% or less is like shooting fish in a barrel. There was more insider selling in Green Mountain Coffee Roasters (GMCR). Finally, I recommended viewing and reading Bill Gross and Jeff Gundlach - both of whom were bullish on bonds.

I was buying moreMonitise (MONI.L) on Thursday morning. In "More Signs of Slowing Growth," I opined that with nominal growth so low and profit margins so elevated, corporate pricing power remains poor, raising the likelihood that consensus S&P 500 profit growth expectations are overly optimistic. In my portfolio (among other trades), I was getting shorter of the market, holding onto automobile shares (despite the rise) -- I later reduced car positions and other longs -- and selling some more Oaktree (OAK) while adding toYahoo! (YHOO) and Henry Schein (HSIC) shorts. I pinpointed the proximate cause behind the mortgage servicers' rally. Finally, I covered the balance of my Caterpillar (CAT) short.

Today started with "The Thrill of the Chase?" and identified the blemishes in JPMorgan Chase's quarterly release. Finally, in "Three Strikes" I surmised that EPS releases at J.B. Hunt Transport Services (JBHT), Harris Corporation (HRS) and Infosys (INFY) likely foreshadow a poor reporting season, a continuing concern of mine. 

So, that was the week that was -- from my perch.

• I don't trust today's rally.

I added to my SPDR S&P 500 ETF Trust (SPY) short on the rally from the lows a few minutes ago.

I don't trust today's rally.

• Namely, Cyprus and Portugal.

Uncertainty continues to grow regarding the Cyprus bailout (the amount needed mushrooms every day), and new funding issues have reemerged for Portugal.

• The rate of growth in the domestic economy is markedly decelerating from the inventory replenishment benefit in January-February.

March retail sales were very weak, in line with my view that the rate of growth in the domestic economy is markedly decelerating from the inventory replenishment benefit in January-February.

Headlines sales dropped by -0.4% (expectations were flat), ex autos/gasoline dropped by -0.1% (expectations were for +0.3%) and the core of ex-autos/gasoline/building materials was -0.2% (consensus was +0.2%).

February was revised down modestly.

With these negative prints, the February +3.8% year-ove- year retail sales increase moderated to +2.4% in March. Some will cite the weather and timing of the Easter holiday -- I just think the consumer (the average Joe) is spent-up not pent-up (and the payroll tax increase might have pushed him over the brink).

The retail sales report is consistent with my view that first-quarter 2013 real GDP of over +3% will slow down to under +2% growth.

The first-quarter earnings report season is already challenging and, with slowing domestic economic growth, will get no better over the balance of 2013.

• J.B Hunt, Harris and Infosys all reported weaker-than-expected earnings and/or lowered guidance.

My continuing theme has been that the consensus profit outlook is too optimistic.

To support that claim, J.B. Hunt Transport Services (JBHT), Harris Corporation (HRS) and Infosys (INFY, adding to a long list of tech EPS disappointments) came in much weaker than expected and/or lowered guidance.

Investors are being lulled into a forced sense of security -- thanks to the easing of central bankers around the world. Ultimately, though, earnings will win out, as they are the mother's milk of stocks.

Case in point: Infosys which reported dreadful results this morning. The shares were sharply higher (along with the rest of the market) yesterday; today they are trading 20% lower.

Also, the Infosys news is likely to hit Accenture (ACN), IBM (IBM) and that ilk in trading today.

Caveat emptor.

• Here it is.

Below is today's economic calendar.

• Here is what the analysts are up to this morning.

The analysts are busy this morning:

Qlik Technologies (QLIK) is Neutral at Janney (price target $26).

PepsiCo (PEP) is downgraded to Neutral at Davenport.

Home Depot (HD) is upgraded to Buy at Jefferies.

Mastercard (MA) and Visa (V) downgraded at Sterne Agee.

Oaktree (OAK) initiated at market perform at Wells Fargo.

• I am less optimistic than most that JPMorgan Chase will be instrumental in the market advancing further.

Despite the fanfare in the business media that JPMorgan Chase (JPM) will be instrumental in the market advancing further, I am less optimistic.

The bank reported a $0.20-per-share beat -- $1.39 was expected, and $1.45-plus was the whisper. The beat was achieved, however, by a nearly $1.2 billion loan-loss reserve increase. Other quarter blemishes include a lower effective tax rate and continued punk loan demand.

Thus far, the stock is slightly lower than Thursday's close despite a large dividend and repurchase announcement. My guess is the stock has discounted all this and will not likely break out to the upside on the release.

In addition, JPMorgan Chase's net interest margin dropped to 2.83%, an all-time low (something about which I recently cautioned).

• Let's take a peek at the overnight and early-morning markets.

Inconceivable! Futures slip overnight:

• S&P futures down 3.50;
• European markets down;
• euro down;
• crude down $1.10;
• gold down $17; and
• 10-year yields 1.76%.