The buzz surrounding the Stock Market this week is palpable. Many are looking for answers to the questions they stewed over for the past two days. Since Friday’s closing bell, they’ve sat wondering the state to come. Besides the latest news on Twitter’s IPO, the Wall Street Journal lists out reasons why we should abandon gold, talks of optimal policy resurface in the FOMC and the Q4 earnings reports spark worry over a bubble. Whew, that was a lot to say! As you can see Monday was indeed a manic one, as various analysts set on their respective paths to shed light on all of the above mentioned issues. We’ll overview each one so you can get an idea of what you can possibly expect for this week and this month.
(Photo credit to: Mashable.com)
Twitter IPO Price Increases
When we first started talking about the Twitter IPO it was merely a prediction, a hope for the upcoming IPO year. Now it’s almost here, expected to go public around Thanksgiving time. There has been much buzz in the Stock Market news about Twitter’s plans and value. Recent reports from Fact Company point towards an increase from the original $17-$20 price range to $20-$23. While this may not sound substantial, it actually increases the overall company value by $2.01 billion. In total, at $17 billion Twitter is poised to be the second largest tech IPO out there, second to only Facebook. At this point they’ve already shadowed search engine giants Google in overall value.
For more on the Twitter IPO, check out Fast Company’s full report.
Should Gold Fade From the Market?
Here’s a question that the Wall Street Journal recently asked their readers. In an article positioning the WSJ FOR fading it out, they point out the recent gold sale by Russia and how gold prices are down by 19%. Overall, gold has not reported an annual loss since 2000, but many individuals feel that the WSJ is somewhat overzealous to get gold out of the picture. Business Insider proves that the recent sale by Russia isn’t really necessary as it was a miniscule amount when looking at the grander scheme. On BI’s side, they feel that it’s still premature to completely write-off gold, providing well-thought out support for their point.
To take a look at their conjectures, read the full article here.
Overview of Optimal Control
Another recent headline to hit Stock Market news was a discussion riding on the coat tails of the announcement that current Fed Vice-chair Janet Yellen may potentially take the reins once Bernanke’s term ends. As that came into light, Yellen’s views on optimal control resurfaced, which provides a solution to the current monetary policy. Basically, if the Fed could apply an optimal control approach to help keep interest rates low while attempting to correct unemployment rates. While Yellen has been a strong advocate for this approach, voicing it in speeches throughout 2012, it is not a plan she is truly innovating. In reality optimal control approaches have been utilized in various ways through the Fed and has been discussed during past FOMC meetings. Another point presented is the fact that though she is an advocate, there’s no solid proof that this will be something that will be implemented upon her entrance to Bernanke’s seat.
Some Stock Analysts Fear Bubble
Lastly, as the Stock Market world focused on Q4 earnings reports last week, this week follows with an unsettling worry of what’s to come. Upon reviewing the charts, reports, numbers, etc some analysts have noted a trend of stock prices rising, while earnings growth expectations decrease. Something that all analysts would most likely agree on across the board is the importance of profit growth with long-term stock returns. When stock prices begin to rise faster than earnings, it’s called a multiples expansion. Its a direct reflection between stock values rising and an increasing price-earnings ratio. With the recent price-earnings ratios falling further from their long-term averages many fear that we’re now in a bubble. The only question remaining is when will it burst?
Stock Market News Wrap-Up
What can be taken from these recent Stock Market news headlines is the fact that there are many possible developments and issues that we can face in the future. Both in the short-term and long-term, it’s very important to stay on the forefront of the daily Stock Market news headlines to ensure you can make well-informed decisions. Now more than ever you should be focusing on keeping your investments safe, your portfolio diverse and eyes attentive on new developments. We’ll be sure to keep you updated on all developments, including Twitter’s IPO, the gold market, optimal control policy, and more.
What are your thoughts about the optimal control approach, Twitter’s IPO price, or current trends based on Q4 earnings? What preparations are you making, if any?
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