As impressive as the Apple Inc. (Nasdaq: AAPL) iPhone's Siri can be, without noise filtering technology from Audience Inc. (Nasdaq: ADNC), it would hardly work at all. That's why Apple Inc. (Nasdaq: AAPL) only uses hardware for Siri that has Audience's latest "earSmart" technology. The short list currently includes just the iPhone 4s, although the […]
Archives for June 2012
June 2012 - Page 7 of 16 - Money Morning - Only the News You Can Profit From
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.
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Stock Market Today: All Eyes on the Fed
It's clear what's moving the stock market today. The market was basically flat all morning until the U.S. Federal Reserve made its highly anticipated policy announcement.
The Fed announced that it would expand Operation Twist by $267 billion through the end of the year.
"This continuation of the maturity extension program (Operation Twist) should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative," the Federal Open Market Committee said today in a statement at the conclusion of a two-day meeting in Washington.
The committee stated that economic growth has been "expanding moderately" this year but warned that "growth in employment has slowed in recent months, and the unemployment rate remains elevated."
Meanwhile, Greek formed a coalition government consisting of New Democracy, socialist party Pasok and the Democratic Party of the Left. Antonis Samaras, leader of the New Democracy party, was sworn in as prime minister earlier today.
"Greece has a government … that is the message that we need to send abroad," said Evangelos Venizelos, leader of Pasok.
The embattled country had gone 223 days without an elected government. One of the new regime's first tasks will likely be renegotiating its bailout terms with the European Union and International Monetary Fund.
Stocks opened slightly lower awaiting the Fed's decision, but following its announcement the market took a sharp dive before heading back upward as many investors had hoped for QE3 rather than more "Twist."
There are two companies that are leading stocks downward today, The Procter & Gamble Co. (NYSE: PG) and Adobe Systems Inc. (Nasdaq: ADBE).
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How to Spot Winners as Facebook (Nasdaq: FB) and Friends Fight Patent Wars
For big players like Facebook Inc. (Nasdaq: FB) and Apple Inc. (Nasdaq: AAPL), last summer marked a dramatic turn toward patent warfare in the world of technology.
Microsoft Corp. (Nasdaq: MSFT) and Apple in July 2011 spent over $4.5 billion at an auction on a portfolio of 6,000 patents.
Then in August, Google Inc. (Nasdaq: GOOG) purchased Motorola Mobility for $12.5 billion, gaining over 17,000 patents.
Facebook and Yahoo! Inc. (Nasdaq: YHOO) currently headline the battlefield. This spring, Facebook spent a whopping $550 billion on patents. Then Yahoo sued Facebook for patent infringement.
You should expect more lawsuits as many of the tech giants have a similar wartime strategy: The best defense is a good offense.
The plan is to snatch up as many patents as possible, then defend their plunder. The strategy effectively chokes out the competition, preventing the other guy from developing or implementing new technology because doing so infringes on patents.
But aggressive patent warfare leads to a big casualty: innovation. Technology investment buzzwords like creativity, growth, research and development take a sideline while companies lock each other up with litigation.
In fact, companies heavily participating in patent warfare doom themselves to fail. That's why investors should steer clear of the patent trolls.
Becoming a Monster: Patent Trolls
Patent trolls buy patents specifically to extort money from innovators. They are akin to a modern day mafia, according to the The Washington Post.
Patent trolls take advantage of the fact that litigation in any arena is typically a war of resources.
They sit atop their pile of patents, waiting to have a tenable enough argument that a company has been infringed upon. Then they sue.
The result? A patent troll suit can easily annihilate tech startups that simply don't have the resources to outlast a larger company in litigation.
Any tech company putting major effort into aggressive patent litigation should raise a red flag to investors. It is evidence of mixed-up priorities that scream failure.
For example, let's take a look at Yahoo.
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The Eurozone Crisis is Far From Over
The Greek election last weekend has brought us a brief reprieve. The nation and the Eurozone have stepped back from the brink.
But the larger truth is that little has changed.
Yes, the Eurozone has survived its latest test, yet there is little indication where it will go from here. Considerable continental support for the common currency remains, and EU officials will soon introduce initiatives to consolidate banking and financial policy in the European Union.
Still, the problems keep mounting, and there is very little resolve to fix them.
At this point, a lot of actions (or lack of actions) could still upset the entire apple cart.
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Today's FOMC Meeting: Here's What the Fed Could Do
U.S. Federal Reserve Chairman Ben Bernanke will address the nation after today's FOMC meeting, and there's not much left in his bag of tricks to stimulate the U.S. economy and avoid the recession many are predicting for 2013.
After more than three years of trying to rouse the economy, hiring remains weak, unemployment is still elevated, and economic growth has ebbed.
As the Fed concludes its two-day policy meeting today, it needs to act sooner rather than later – and may be ready to do so.
"I think Fed officials will send a pretty decisive signal that they are prepared to provide more support to boost economic growth and lower unemployment," Brian Bethune, economics professor at Gordon College in Massachusetts, told the Associated Press.
Here is a trio of scenarios Team Bernanke could present.
What Could Happen at Today's FOMC Meeting
#1: The Fed Continues Operation Twist
There's a good chance the Fed will decide to continue its previous monetary stimulus method, "Operation Twist."
Under this strategy, the Fed traded $400 billion in short-term bonds for those with longer maturities. The goal of the twist is to drive down long-term interest rates.
This creates an environment that makes it cheaper for businesses to obtain loans and for consumers to get a hold of mortgages and other forms of credit.
Goldman Sachs Group Inc.'s (NYSE: GS) chief economist Jan Hatzius said in an e-mail to clients he expects the Fed to start a new asset purchase program.
"A decision not to ease is tantamount to a tightening. At this point we'd be quite surprised if we saw no easing," said Hatzius.
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Is The Rally For Real...Or Just Part Of the Games Bankers Play?
The markets are rallying, again. Will this time be different? Or is this just another head fake?
The truth is the current rally is not surprising given what's coming out of the G20 meeting, what's likely to come out of the Fed's Open Market Committee meeting today and Jamie Dimon's Congressional testimony yesterday.
But things aren't what they appear to be. What's happening behind the scenes is far more important than what's being said publicly.
So, investors better understand what the real game is here and how to play it.
To do it, we need to work backwards.
Jamie Dimon, CEO of JPMorgan Chase, has repeatedly said under oath that his bank isn't too big to fail.
That fact that he's implying it's okay to let a bank the size of JPMorgan collapse and enter bankruptcy in the event of "a moon hitting the earth" (admittedly unlikely) or potentially huge losses from something like bad bets on derivatives, is a flat out lie.
Of course, that lie can't be proven unless the bank was to actually fail, so it's unlikely that Mr. Dimon could be brought up on perjury charges. But it's still a flat out lie.
JPMorgan Chase and all the big U.S. banks are too big to fail.
And in that lot we can also cast all of Europe's big "universal" banks. They're all too big to fail in a very real sense because they are all interconnected.
Between the crossover of portfolio holdings, interbank lending mechanisms, derivatives bets and counterparty exposure, all of the big banks suffer from real contagion calamity concerns.
As a result, the breakdown of trust anywhere impacts trustworthiness of banks everywhere.
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Stock Market Today: Who's Up, Who's Down
Many companies are making headlines in the stock market today as markets are up on hopes of more monetary easing from the U.S. Federal Reserve as it concludes its two-day policy meeting tomorrow.
Investors might be having a delayed reaction to Sunday's Greek elections as yesterday's trading volume was much lower than average, and not much movement occurred.
The markets are also responding well to the number of housing permits filed in May which was at its highest level since September 2008. Permits were reported at a seasonally-adjusted annual rate of 780,000, easily exceeding forecasts of 725,000.
For now investors wait in anticipation for the Fed to make a move, but if none is taken expect a slight downturn in the markets tomorrow afternoon.
In the meantime, here are five stocks to follow in today's trading:
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How this Year's Election Will Shape "Recession 2013"
More and more Americans have voiced concern over the U.S. economy barreling toward "Recession 2013."
Fears were fueled by a May 22 Congressional Budget Office (CBO) report that claimed the scheduled year-end tax increases and spending cuts (known as Taxmageddon and fiscal cliff) will be followed by a U.S. recession.
Congress has until the end of the year to change the course of the U.S. economy, although the longer it waits, the more volatility could creep into markets.
"The markets don't want to wait until Dec. 31," Peter Fisher, senior managing director at BlackRock Inc., and a former Federal Reserve and Treasury official, told Bloomberg Television May 30. "Congress is going to have to wake up in October when the markets start pricing in the uncertainty of a recession in 2013."
But there's another big factor at play: Election 2012.
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5 Reasons the New Microsoft Surface Tablet is Not an iPad Killer
With yesterday's (Monday's) debut of the new Microsoft Surface tablet, the company suddenly and unexpectedly took direct aim at the Apple Inc. (Nasdaq: AAPL) iPad.
At the event, Microsoft Corp. (Nasdaq: MSFT) CEO Steve Ballmer unveiled a device with a 10.6-inch widescreen display and a pressure-sensitive cover that also serves as a keyboard. As one would expect, the Surface tablet runs Microsoft's next generation operating system, Windows 8.
Oddly, Ballmer left out several key details, such as the exact date Surface will go on sale and how much it will cost.
What's clear is that Microsoft recognizes it has fallen behind in the mobile market, and that it didn't trust any of its traditional PC-building partners to produce a compelling Windows 8 tablet.
The surprise announcement of the Surface tablet, preceded by an invitation just days before that gave no details, succeeded in generating an Apple-like buzz.
"If imitation is the sincerest form of flattery, the compliments from Microsoft poured down like a torrential storm on Apple last night," analyst Brian White of Topeka Capital Markets wrote in a research note today. "At the same time, this event indicates to us that Microsoft is still searching for its own identity in the post-PC era, something that has come naturally for Apple with the rise of the mobile Internet."
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