Thing One: The Sun'll Come Out Tomorrow: OK, OK, housing market, enough already, we get it: You're recovering.
Like Little Orphan Annie warming the heart of Daddy Warbucks with song and pluck, our nation's housing market is finally even winning over the cynics like me. Doggone it, it's getting better. The Commerce Department yesterday said new home construction starts jumped a gosh-darn 15 percent in September to their fastest pace since July 2008. They're up 35 percent in the past 12 months, according to economist Robert Brusca. Housing still has a long way to go: New homes were being started at an annualized rate of 872,000 units in September, which is still well below the 1 million units we saw even in the middle of the recession. And yet thinking about tomorrow clears away the cobwebs and the sorrow, 'til there's none.
"This is not yet a level of activity that we know can be sustained," Brusca wrote in an email. "It is not a level that is normal in historic context but it is much better than where we have been and it looks like real progress."
One look at the housing-starts charts in the Washington Post and Quartz, to name two, will show you last month was not some fluke, but a big and sustained rally from a very deep bottom. It is confirmed by rising home-builder sentiment, which is the highest since June 2006. Home re-sales have also been on the rise, along with home prices. We can thank the Fed for keeping interest rates at rock-bottom, encouraging demand for housing, writes Matt Phillips at Quartz, who also takes time to call out the bow-tie-wearin', clockin' and starin', economists who all said the Fed was wasting its time.
Housing led us into the Great Recession, and though it can't pull the entire economy with it on the way back out, it can help. A lot. Neil Irwin at the Washington Post argues that, if home construction merely gets back to its long-term trend, it could add 1.7 percentage points to total economic growth for the next year. That could be the difference between a weak economy and a more-normal one. It could mean more jobs, notes the Wall Street Journal, pointing out that the National Association of Home Builders says each new house creates three new jobs and $90,000 in tax revenue. Aw, go on, scram, will ya. I've just got something in my eye, that's all.
Thing Two: The Worst Over For China? China reported the complete collapse of its economic growth in the third quarter -- to a mere 7.4 percent gain from a year earlier. That is pretty bad for China, which has long had a target of 8 percent growth for the year, notes the Financial Times. It will probably miss that full-year target for the first time since 1999. And yet the government is probably much more OK with missing its target than usual. The slowdown hasn't meant mass job losses or unrest, and the government had been trying to cool the economy anyway to help deflate a dangerous property bubble. The economy has recently shown some signs of a comeback, in any event, notes Reuters -- though the recovery will likely be a sluggish one.
Thing Three: Talking Heads: Europe's leaders meet in Brussels today to talk debt-crisis stuff. It won't matter much, suggests the Washington Post, as they won't talk about much more than the lunch order, having decided to put off truly hard decisions about Europe's future to some other time. Maybe the next summit meeting, or the one after that. No hurry, though, as the financial markets are temporarily not a roaring bonfire, in part because of hopes that Spain will soon get some help from the European Central Bank and/or Europe's pile of bailout money. But delay is risky: Bloomberg notes that the "worst-case" scenarios for recent stress tests of Spanish banks are at real risk of coming true, leading to big bank losses. That could wake up financial markets.
Thing Four: Playing Chicken With The Cliff: You can't turn on financial-news TV (not that you do that, nobody does that), crack a newspaper or go on the Interwebs these days without hearing scary warnings about the fiscal cliff. That's the round of tax hikes and spending cuts due to take effect with the flip of the calendar to 2013. Altogether the cliff could represent a big fiscal hit to the economy, possibly causing another recession, the warnings go. But it could be a gradual process, and the effects could bother Republicans a lot more than Democrats, with big tax hikes for the wealthy and big cuts in the defense budget. That's why President Obama is playing hardball in negotiations over the cliff, the Washington Post writes, threatening to let the cliff happen if a compromise doesn't include more tax revenue from the wealthy.
Thing Five: Considering Gupta: The prosecution and defense submitted their arguments yesterday for the sentencing of Rajat Gupta, the former Goldman Sachs director who was convicted on insider-trading charges earlier this year. The prosecution wants him to go to prison for a decade, while his lawyers asked that he be sent to Rwanda to do humanitarian work, the New York Times writes. Gupta has gotten more than 400 letters of support, including from Bill Gates and Koffi Annan.
Thing Six: In Soviet Kyrgyzstan, Insider Tips Trade You: U.S. prosecutors have prepared insider-trading charges against Maksim Bakiyev, the son of the former president of Kyrgyzstan, marking a shift in relations with a country that was once a big ally in the war on terror, the Wall Street Journal reports. Bakiyev was arrested last week in the U.K. on an extradition request from the U.S. Of course, he may consider U.S. prisons a safe haven: Following a coup that deposed his father, he is wanted in his home country on charges of stealing money from the country's biggest bank and having a bunch of people ethnically cleansed. So, yeah, some insider trading charges probably sound nice right now.
Thing Seven: Everybody Racing Away From Lance Armstrong: The calamitous fall of Lance Armstrong continued yesterday. He stepped down from the Livestrong charity he founded, Nike ended its advertising relationship with him, and Anheuser-Busch said it was going to drop him when his contract ends at the end of the year. Other sponsors are considering leaving Armstrong or already have. He is doomed to lose his seven Tour de France titles amid a flurry of evidence that he was a master doper throughout much of his career.
Thing Seven And One Half: Judging Books By Their Covers: BuzzFeed has prepared a list of 21 of the most ridiculous books you will ever see, including "Rosey Grier's Needlepoint For Men," "Old Tractors And The Men Who Love Them," and, wow, many more.
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Calendar Du Jour:
Economic Data:
8:30 a.m. ET: Weekly Jobless Claims for the week of Oct. 13
10:00 a.m. ET: Philadelphia Fed Factory Index for October
10:00 a.m. ET: Conference Board Leading Indicators for September
Corporate Earnings:
Morgan Stanley
Microsoft
Verizon
Heard On The Tweets:
@emptywheel: What kind of terrorist plans to attack the Fed and doesn't aim to get the vault of gold?
@zerohedge: Someone should explain to the 'al qaeda terrorists' that blowing up the Fed is the last thing they should do to crush the US economy
@justinwolfers: Thinking of picking my daughter up from school and cooking my family dinner, despite being a man.
@jakebeckman: For what it's worth, my cab driver thought Obama crushed it last night and that victory "is in the air." I feel like Tom Friedman.
@thecajunboy: "The Staggering Jackass Gazette" RT @realDonaldTrump My twitter followers will soon be over 2 million. It's like having your own newspaper.
And you can follow me on Twitter, too: @markgongloff
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