Strib Biz Live

Strib Biz Live

Monday, Oct. 14

  • Good morning from the business news desk of the Star Tribune.

    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.

    The stock decline is not uncommon in these moments of political brinksmanship. The Wall Street Journal this morning cites research by Minneapolis-based Leuthold Weeden Capital Management as saying investors routinely get jitters before the government reaches a deal on raising the debt ceiling.

    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.

    In Minnesota, more farmers are reporting that soybeans are now in for harvest 2013. But the government shutdown means no data is coming on farm activity, so it is hard to know whether farmers have made up for lost time from earlier in the growing season. Corn is still of coming in.

     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.

  • Dow down 90 points early Monday as budget deal fails to materialize over weekend
  • Hard to easily make sense of the Nobel award in economics, other than asset prices are rational, but only sort of.…
  • Pentair Ltd., the Golden Valley-based provider of water, fluid equipment, valves and other industrial products, said this morning that its president and chief operating officer, Michael Schrock, will retire at the end of the year. Schrock is 60. The announcement carried praise for Schrock from Pentair chairman and CEO Randall Hogan.
  • Everyone involved in non-profits needs to read the James Stewart column "A Ransacked Endowment..."…
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