OPERATION TWIST LATEST MONETARY TOOL TO FIX US ECONOMY - Last night's move from the US Federal Reserve - Operation Twist - saw the US central bank decide to sell short-term debt to buy long-term debt - quantitative easing without printing more money - in an effort to boost the economy. The move is known as Twist because it first happened in 1961 when the Twist was the dance craze. The Fed held its main interest rates unchanged at between zero and 0.25%, saying economic growth remains slow; unemployment is high; household spending has increased at a modest pace but the housing sector remains depressed.
Art Hogan, managing director at Lazard Capital Markets in Boston, says the Fed had a lot to do during its two- day meeting. Its previous three meetings had downgraded the US economy and the Fed is now down to the interesting parts of its monetary policy tool chest. He says that Operation Twist is a pretty aggressive - and difficult to explain - move. The analyst says that the Fed looked at its huge balance sheet and attempted to flatten its yield curve.
On the economy, Mr Hogan says the Fed also used different language to emphasis the increased risks it is facing. It added that the crisis in the euro zone is a worrying feature of the world economy. While the Fed did have a sprinkling of good news, including increased IT spending by US firms, it did not tell people what they really wanted to hear - that the US economy is doing better.
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MORNING BRIEFS - The Fed's move came as the latest report from the International Monetary Fund said the risk to global financial stability has increased for the first time since the collapse of Lehman Brothers and the October 2008 financial crisis. The IMF say the problems of sovereign debt in the euro area has spilled over into the banking sector, driving market volatility and spreading the crisis to other countries and industries. It warns that time is rapidly running out for governments to deal with the crisis, and says government options for action are narrowing all the time.
*** In a letter to Ryanair, from Aer Lingus and released this morning, Aer Lingus rejects Ryanair's complaints that it is "continually ignored" by the Aer Lingus board.
Aer Lingus chairman Colm Barrington's letter said that one of the greatest concerns that Aer Lingus hears from shareholders relates to Ryanair's shareholding in the company, and its impact on its options and value. He said he welcomed Ryanair's recent statement that it would be prepared to sell its 30% stake in Aer Lingus, if the Government found a buyer for the State's 25%.
*** Results this morning from agri-business firm Origin show that group operating profit was almost 11% higher at €85m. Its chief executive Tom O'Mahony said that the year saw am improved backdrop for primary food production and sustained recovery in farm incomes which led to good growth within its Agri-Services business.
*** Microsoft founder Bill Gates, for the 18th year in a row, tops the Forbes' list of the 400 richest Americans. His wealth grew by $3 billion to $59 billion as Microsoft's stock climbed. At number 2, Warren Buffett dropped to $39 billion as the value of his Berkshire Hathaway firm slid. Oracle chief executive Larry Ellison is the third richest American, with a net worth of $33 billion, $6 billion more than last year. Investor George Soros, who by bowing out of the Hedge Fund business, jumped from 14th last year to 7th on the list this year - entering the top ten with $22 billion. The richest family is the US is the Waltons - who own the giant retail chain Wal-Mart - with a collective wealth of $87 billion. Facebook's Mark Zuckerberg was the biggest dollar gainer on the list, with a net worth of $17.5 billion, earning him the number 14 spot. Google rivals Sergey Brin and Larry Page added $1.7 billion each to their now €16.7 billion, but they slipped five spots in the rankings and are tied at number 15. There were 42 women on the list of 400, including Oprah Winfrey at 139, with a net worth of $2.7 billion.
*** On the currency markets the euro is trading at $1.3563 cents and 87.69 pence sterling.
