Pig Sales Fly Blind as Data Cut by Shutdown Hampers Firms

Pig Sales Fly Blind as Data Cut by Shutdown Hampers Firms

For Brian Duncan, a 49-year-old hog farmer in Polo, Illinois, the government shutdown is converting the economic fundamentals of his business into a guessing game. Duncan relies on U.S. Department of Agriculture commodity data to price his hogs. That information flow has been cut off with the partial shutdown of the federal government, which entered a fourth day today. The lapse has had a dramatic effect on his operation in north-central Illinois, he said. “Everyone in the food chain relies on the government to be an unbiased source of prices,” said Duncan, who sells 50,000 pigs a year to meat packers, including Tyson Foods Inc. (TSN), Smithfield Foods Inc. and Cargill Inc. “We have no clue what the price of hogs is or the price of the pork.”From farms to factories, businesses are getting an unwelcome lesson on how central Washington’s digital feed has become in the information age. Wall Street traders, home builders, economists and cattle ranchers are all learning to do without as the shutdown shows no sign of ending.

Over the past decade, “we’ve seen a shift toward a more data-driven approach in business decision-making, and the combination of government and private data has been very valuable,” said Erik Brynjolfsson, director for digital business at the Massachusetts Institute of Technology’s Sloan School of Management in Cambridge. “You lose one part of that, you lose the synergy.”

Trade Statistics

The government closure has shuttered Commerce Department websites that track economic data, including those run by the Bureau of Economic Analysis and the U.S. Census Bureau. That means businesses and consumers don’t have access to historical information including gross domestic product, new-home sales, demographics and international-trade statistics.

The agency’s National Oceanic and Atmospheric Administration website is also down. NOAA sites that provide public-safety information, like those of the National Weather Service and the National Hurricane Center, are still operating.

The Energy Information Administration will be able to post natural-gas prices, oil inventories and coal-production data for only a week or two more before funding runs out, said Jonathan Cogan, an agency spokesman. The U.S. International Trade Commission’s website and database of complaints and agency filings also have been shut down.

‘Situation Friday’

Without a shutdown, the U.S. Labor Department would be releasing its monthly employment report today, a highly anticipated event that can move markets around the globe.

Usually, that would mean fresh bagels for traders at Williams Capital Group LP, an institutional brokerage in New York.

“They are brought in specifically for ‘employment situation’ Fridays,” said David Coard, head of fixed-income trading. “We won’t have an ‘employment situation’ Friday. There will be no bagels.”

The effects of reduced data will only increase as the disruption continues, said Joseph Minarik, research director at the Committee for Economic Development in Washington and a former chief economist of the Office of Management and Budget.

“We will begin to see difficulties if we are flying blind” for an extended period, he said. “A few seconds of lost visibility is not going to be a big problem, but more than that you have to rely on your instruments, and they better be right.”

Without government information as a guide, private reports are taking on greater importance in investment and business decisions, said Mark Vitner, a senior economist in Charlotte, North Carolina, for Wells Fargo & Co. (WFC), the biggest U.S. home lender.

‘Data Starved’

For example, without the monthly employment data that would normally be issued today, Automatic Data Processing Inc.’s nongovernment payroll report, released earlier this week, gained greater prominence, he said. Still, such data are supplements rather than substitutes for the government figures, he said.

Vitner said the shutdown has made him more aware of just how often government information is used. “It surprises me how much we go to the Census website,” he said. Still, he called the lack of information a “relatively minor inconvenience” because “it’s not like we’re data-starved.”

It has been enough to get some traders up in arms — literally. Traders, analysts and fund managers from Huntington Asset Advisors in Cincinnati moved up their fall client day to today, giving customers an update on markets and the economy over wine and cheese, coupled with a round of skeet shooting, said Peter Sorrentino, senior vice president and portfolio manager, who helps oversee about $14.7 billion.

“Most of our customers are annoyed with what’s going on, so they can have a chance to vent their frustrations,” he said.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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