GURU Watch: Marc Faber on Operation Twist, outlook on US economy

Marc Faber speaks on Reuters Insider: The Fed just stated the obvious. The global stocks' sharp decline in the last few days only reflect their concern about the outlook of the world economy. The US sptock market peaked this year on May 2nd, when the S&P went to 1370 and the market has been declining since then. The Fed's decision to shift asset holdings from short-term to long term will pose significant challenge in the future when there's a need for the Fed to increase interest rates (for whatever reasons such as concerns about inflation). Doing so would put pressure on  the bond market.

His view is that if the S&P drops to around 900 to 950, the Fed will implement QE3. The dollar will continue to gain momentum because he thinks USD is still better than other currencies. Regarding China, there are views that the Chinese bubble is bursting (as indicated by the Hong Kong stock market). The Chinese economy is slowing down and might crash. Gold will continue to high value because when asset prices go down, Mr. Faber believes everyone will pressure the Fed to print money

Youtube Rock in rio

artists katy perry, elton john, rihanna.
http://www.youtube.com/rockinrioeuvou?feature=ticker
Does anyone know the artists' calendar? When is each one performing, so I can be watching.

Facebook timeline and open graph reaction

From Zuck's keynote speech, Timeline is a way to engage your friends and family "all your stories, all your apps and the new way to express who you are." Facebook staff learned that people are interested in using application to express themselves but the old design became unwieldy when they started putting boxes at the end of their profiles. The next new feature is Open Graph, to identify new vocabulary that helps people connect. There is a new way to express light-weight activities called "ticker".

Trending at the moment: Magic brownie

According to Wikipedia, magic brownie is a type of brownie made with cannabis butter. But why is this trending on twitter?

So what are tools that the Fed has in order to carry out its dual mandate?

The Federal Reserve essentially have three important tools that it can use to accomplish its dual mandate of maximum employment and price stability. They are the open market operations, reserve requirements and discount rate.

Word cloud for today's FOMC press release

The Fed made "Operation Twist" official after the FOMC Meeting

Not a shock and awe operation as some might have expected from the Fed's statement today after the FOMC meeting. The Fed basically will buy $400 billion of long-term Treasury and sell $400 in short-term (which some might call this "Operation Twist") until the middle of 2012. This is equivalent of trying to flatten the yield curve.  As a result, there will be no significant money supply expansion for the time being.  However, this is only the official stance of the Fed's policy as of now. The Fed can of course step in anytime to pump in liquidity into the market if need be. From the statement, the Fed's view is that the US economy is still struggling to find a foot hold and remains anemic.

Trends as results of announcement:     bank stocks  DOWN  gold  DOWN