An economist who got his Ph.D at the University of Minnesota, Lars Peter Hansen, is one of three co-winners of the Nobel Prize in economics this morning. Hansen was honored along with his University of Chicago colleague Eugene Fama and Robert Shiller of Yale for their work on developing methods to understand the movement of asset prices and the way people invest.
It doesn't take a Nobel economist to figure out what's going to happen with investments today. It's a brand new week but it is going to feel like last Wednesday. With no progress in Washington on a deal to avert a government default, let alone reopen the government, markets are poised to trade sharply lower. Asia's major markets were closed for a holiday Monday and Europe is slightly lower. Expect a 100 point drop in the Dow at the open. There is no bond trading today due to the Columbus Day holiday.
There have been six debt-ceiling showdowns since March 2011 and the S&P 500 sank a median 2.5% in the eight trading days before a deal was reached. That means a buying opportunity for investors, though it takes some time for the market to recover from the swoon. The Journal says Leuthold's data shows the S&P rises a median 3% In the 21 days after an agreement.
Of course, there's no data for what happens if no deal is reached.
Earnings season kicks in to high gear later this week with reports from St. Jude Medical, Piper Jaffray, US Bancorp, Select Comfort, Supervalu and the state's biggest company by revenue, United HealthGroup. St. Jude is in the news this morning after announcing the acquisition of Nanostim Inc., a California-based maker of wireless pacemakers, for $123 million.