Strib Biz Live

Strib Biz Live

Monday, Sept. 23, 2013

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

    Markets in Asia and Europe were mixed overnight. The news that German Chancellor Angela Merkel won a third term gave a lift in Europe and was credited with boosting U.S. stock futures before the market opened. Now about 45 minutes into the trading day, U.S. markets are down slightly. Apple is up almost 5% after putting out a statement that it sold 9 million new iPhones 5s and 5c since Friday, well above the 5 million to 6 million that analysts forecast.

    There is no single drama that investors are focused on this
    week as there was with the Fed meeting last week.
    There will be some important data coming on housing, tomorrow with the Case-Shiller house price data for July and August new home sales coming on Wednesday. Two national homebuilders, KB Home and Lennar, report earnings on Tuesday, another development that could shape views on housing.

    Farmers in Minnesota and throughout the Midwest are beginning the fall harvest of corn and soybeans, the two biggest crops. We had a full rundown yesterday. On commodities markets this week, hogs are being closely watched as a glut of swine are expected to hit the market after the late summer heat kept many farmers from selling.

    In the Star Tribune today is a look at the Tom Petters saga five years after it began. The anniversary of the raid that led to Petters arrest and the uncovering of a $3.6 billion Ponzi scheme is tomorrow. Be sure to check out story and video with reporter David Phelps.

  • For more on commodities, here's the weekly Futures File summary from Walt Breitinger, a futures broker in Valparaiso, Ind.:

    Fed Keeps Pump Primed

    Federal Reserve surprised markets on Wednesday with an announcement that they were not changing anything.
    The Fed reported that they will continue buying $85 billion of bonds per month in an effort to stimulate the economy by keeping interest rates low. This came as a surprise to most investors who had been expecting them to reduce the purchases by $10 billion. Instead, the “quantitative easing” program (QE3) is continuing in full swing until the Fed sees more evidence of an improving economy.

    The immediate response to this news were swift rallies in gold, stocks, bonds, and foreign currencies, all of which benefit from lower US interest rates. Gold had the largest gain, rallying more than $55 per ounce (+4.2%) to $1367 on Wednesday. By the end of the week, the yellow metal had given up half of its gain, trading Friday for $1338.

    Coffee Grinds Lower

    Coffee prices fell to $1.11 per pound last week, the lowest price in over four years. Prices have been in decline as US inventories of coffee swell to levels not seen since 2009. In addition to already large inventories, large crops could be hitting the global market soon. The world’s largest coffee producer, Brazil, is benefiting from rains during the coffee trees’ flowering stage that should boost production of next year’s crop. Meanwhile, Vietnam is beginning its harvest of the world’s second largest crop, which could put near-term pressure on prices. For now, baristas and home brewers should benefit from lower prices, which are down 64% from the high of $3.06 made in 2011.

     Natural Gas Rises

    Natural gas prices lifted to a two-month high last week on news that inventories are currently 5% lower than last year. Unseasonably warm weather in September has increased demand for air conditioning and electricity, much of which is ultimately generated by natural gas. This strong demand has helped to keep natural gas inventories lower, helping prices rise. Other traders are eying weather in the Gulf of Mexico, home to 5% of US natural gas production. Although the Gulf of Mexico has largely been spared from significant damage this hurricane season, there is still potential for tropical storms to affect the offshore oil and natural gas production rigs scattered throughout the Gulf.

  • Apple shares had popped up nearly 6% shortly after the market opened and were closing in on $500. They've settled back to around $488, a 4% jump from Friday's close. Key to their statement about the iPhone shipment figures was that they now expect revenue for the July-to-September quarter (the fiscal fourth in Apple's calendar) to be "near the high end" of its previous guidance of $34 billion to $37 billion. And gross profit margin will also be near the top of its prior guidance of 36 to 37 percent. Not a wide spread on the margin guidance, of course. With new iPads expected next month, the company appears to again be setting itself up for a strong yearend.
  • Good news on MN crops: Corn and soy harvests look solid, though spread of yield will be uneven. Our video report:
  • Cool retrospective on Dave Petters Ponzi scheme. Story and video here: And great package in today's print biz section
  • Following exit from brutal recession, eurozone economic recovery may be gathering pace, survey shows:
  • First in the Strib: Leonard, Street and Deinard announces merger with Kansas City firm, Stinson Morrison Hecker.
  • Cue Sam Jackson: Snake aboard Qantas airliner grounds 370 Tokyo-bound passengers in Sydney overnight. Couldn't resist
  • North Loop area of downtown Minneapolis is truly transforming into a vibrant community -- as shown by the Whole Foods store that's about to open this week. Strib's Jim Buchta explains how the re-development isn't over yet. More than 1,000 more rental units are under construction or on the drawing board. Check it out:
  • Opening Belz links:

    Guy used to make $100k a year, now flips burgers – Bloomberg
    Americans might have to get used to “jobless recoveries” – Washington Post
    Signs show mortgage requirements may be easing – LA Times
    Schafer: Obamacare is already slowing health care cost increases – StarTribune
    Q and A with Elissa Hansen, young econ dev specialist in Duluth – News Tribune
    Mortgage companies move into MN as housing improves – StarTribune
    Metro area economies in the Upper Midwest mostly grew fast in 2012 – Fed Gazette
    Is oil twice as big an industry as ag in North Dakota? Not so fast – Fargo Forum
    Oh wait, Janet Yellen can be combative too – WSJ
    The largest food fraud in U.S. history involved honey laundering – Businessweek
    New Whole Foods store rounds out booming North Loop – StarTribune

  • While corn and soy bean crops look solid in most of MN farm country, the state's cattle and dairy operations face cost pressures as dry pastures and a short of hay has pushed up feed costs. Strib's Mike Hughlett explains.
  • The U.S. Labor Department says Medtronic  will pay $290,000 in a pay discrimination lawsuit settlement involving 78 Hispanic workers who were paid less than their white counterparts. A story will appear on soon.
  • Talk of the town this morning continues to be about the Vikings falling to an 0-3 start with yesterday's loss to the Browns...

    The picture that made the front of the sports page this morning is particularly powerful because it captures so many of the fans so clearly as Cleveland tight end Jordan Cameron pulled in the winning catch. Here's one from a split second before, as the ball was falling into his hands, with the same tension visible in the faces of the Viking faithful...

    by Evan Ramstad, Digital...

  • Janet Moore has just posted an item on the Just Listed blog about a new affordable housing project in Chaska.
  • Thx. Hope your classmates advanced enough to know not to do this. Ha! @McLeanDonnelly Just took business ethics; will share with my class.
  • No sales slow-down in the Twin Cities, pending home sales in the Twin Cities up 8% last week. Coming tomorrow: Case-Shiller price index.
  • Stocks fell again today, though not as much as they did on Friday. Even so, the declines over the last few days have wiped out the gains that happened on Wednesday after the Fed decided to keep its bond-buying stimulus program going.

    For tomorrow's newspaper, we've got an interesting feature coming about how a Medina-based hardware store survives against the big box competition. Economics reporter Adam Belz is looking into Minnesota-China trade after attending a speech on the topic at the Economic Club today. Energy reporter David Shafer has looked into the fire at the St. Paul refinery.

    Tomorrow, look for coverage of General Mills' annual meeting. We'll have some live action from the meeting itself and updates from Mike Hughlett through the day.

  • An analyst at research firm Ovum is not optimistic about BlackBerry’s prospects as a private company.
    "Taking BlackBerry private doesn't solve the fundamental problems at the company,” said analyst Jan Dawson. “The company's device sales are cratering, and its announcement last week that it no longer intends to pursue the consumer market is essentially the death knell for this business.”
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