Press Esc to close

Welcome to Money Morning - Only the News You Can Profit From.

Close

Apple and Google Declare War – Here's the Secret Winner

Resident tech guru Michael Robinson and I are both big science-fiction fans. Michael likes traditional sci-fi stories, like those of Robert Heinlein and Isaac Asimov. My sci-fi interests are more focused on “Golden Age” radio dramas, “pre-code” comics, and old movies and TV shows… like The Twilight Zone and The Outer Limits.

And when Associate Editor Cris Skokna joined our team a few months back, Michael and I were so pleased to discover that he was a sci-fi guy as well that I jokingly dubbed the three of us as “The Trilogy.”

And the other day, Cris told me a story that I absolutely had to share with you…

  • Today's FOMC Meeting: Fed Votes Operation Twist to Continue Today's FOMC meeting - which started Tuesday - ended in a widely expected manner.

    The Fed announced it will extend Operation Twist, which was set to expire at month's end, until the end of 2012, in an effort to keep interest rates low.

    The Fed will expand Operation Twist, which replaces short-term bonds with longer-term debt, by $267 billion.

    In a statement, the FOMC said the prolongation of Operation Twist "should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative."

    The Fed pointed to the U.S. economy's poor recovery as reason for more "twist."

    "Growth in employment has slowed in recent months and the unemployment rate remains elevated," the Fed reported. "Household spending appears to be rising at a slower pace than earlier in the year."

    The lack of more intense stimulus, namely a third round of quantitative easing, sent the Dow Jones, which had been flat all day, plummeting some 50 points in just seconds. All three major indexes treaded lower following the report. Gold, hoping for QE3, sold off some $25 an ounce.

    The yield on the 10-year Treasury note rose to 1.67% just after 1 p.m. in New York from 1.62% late yesterday.

    To continue reading, please click here... Read More...
  • The Fed's Mixed Messages on QE3 Federal Reserve Chairman Ben Bernanke, speaking before the Joint Economic Committee Thursday morning, refused to hint at whether or not investors can expect another round of stimulus - either in QE3 or Operation Twist - to help the struggling U.S. economy.

    Rep. Kevin Brady, R-TX, asked Bernanke to "look the market in the eye" and tell investors what to expect from the Fed. Bernanke refused to commit to a policy, but said the Fed could deliver an answer in the next couple of weeks.

    Bernanke's comments indicated that the Fed would continue to monitor the U.S. economy as needed, but that no action like another round of quantitative easing was immediately necessary.

    "The Committee reviews the size and composition of its securities holdings regularly and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery," Bernanke said in prepared remarks.

    His non-committal comments contrasted those made a day before by other Fed members, including Vice Chair Janet Yellen and San Francisco Fed President John Williams, who indicated that more stimulus by the central bank is necessary to boost the U.S. economy.

    "It may well be appropriate to insure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest," Yellen said Wednesday in a speech in Boston.

    Also on Wednesday Federal Reserve Bank of Atlanta President Dennis Lockhart said another round of Operation Twist could be considered.

    "There is capacity to do more," Lockhart in a speech in Florida. "It is certainly an option. I'm not going to speculate on what the FOMC will do."

    Bernanke's remarks followed the market's best daily performance of 2012. The Dow surged 287 points on Wednesday, closing at 12,414.79. Despite the mixed Fed messages, markets started off well Thursday, with each index rising more than 1% after The Peoples Bank of China announced it would cut its deposit and lending rates 0.25%, marking its first cut since 2008.

    To continue reading, please click here... Read More...
  • Why Traders Booed the Fed's "Operation Twist' – And You Should, Too With "Operation Twist," U.S. Federal Reserve policymakers are attempting to use an old strategy to launch a new attack on the wheezing U.S. economy.

    But the assault, announced after the central bank's Federal Open Market Committee (FOMC) meeting concluded yesterday (Wednesday) afternoon, isn't expected to have much long-term success.

    "The way [Fed policymakers] handled this proves that the Fed doesn't have much power left," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "It tried to use big sweeping statements, and careful language ... and it still didn't work - the market sold off ... and traders [on the trading floor in New York] actually booed. They don't want this ... they know it's bad."

    As many expected, the central bank will use a derivation of a 1960 s initiative that's designed to "twist" the interest-rate "yield curve" by flattening it out. Between now and the end of June, the Fed will buy $400 billion worth of bonds with six-year to 30-year maturities while selling an equal amount of shorter-term debt with three -year maturities.

    The Fed intended to rally markets with a sign of reassurance, but stocks failed to reverse their declines. The Dow Jones Industrial Average nose-dived 284 points, or 2.49%, the Standard & Poor's 500 Index skidded 2.94%, and the tech-laden Nasdaq Composite Index slumped 2.01%.

    The market consensus: "Team Bernanke" has again made a move that will do more long-term harm than good to the U.S. economy.

    To continue reading, please click here...

    Read More...