Housing starts headed in the right direction

I love the bubbleheads in the media who spin a fall in housing starts as a bad thing in a market replete with unsold homes…Hello! It’s a good thing! Work off the inventory, then and only then, build new homes.

Futures markets are off their lows in the US but currency markets are waffling in well-worn ranges. Not much to go off of here at the moment, but once the cash markets get going in New York, we’ll likely hitch the forex wagon to them.

A rare ray of sunshine

The laws of supply and demand seem to be still in force. Pending home sales jumped in August as prices continue their tumble and mortgage rates slipped. Much of the buying came in the hardest hit regions like California, Nevada and Florida.

All eyes are on equities as EUR/JPY swings dominate the market. Emerging markets are a close second as jitters remain high in those secondary markets. If they settle down, look for a lessening of risk aversion and a stronger EUR/JPY. The cross trades now at 137.30.

OFHEO home price index drops 0.6%

Those hoping for signs of a bottom in the housing market will be disappointed. Prices fell a further 0.6% in July from June, according to OFHEO, the Fannie/Freddie regulator.

The buck is doing better after a dip as the hearing on the Hill got underway. Schumer’s comments on not holding up the bill are helping.

Mr. Market working his magic

Hold off on the bailout kids, home sales in Cali are on the rise. Plunging prices have flushed out the buyers, according to this report.

On the bailout front, the wires breathlessly report that Paulson and Bernanke were seen entering Speaker Pelosi’s office on Capitol Hill.

NAHB index ticks up to 18 from 16

The home builders index rose in September as the GSE mess has been cleaned up and signs of stability gave emerged in the housing markets, the trade group said.

NAHB index at records lows again

No bounce in housing in August as the NAHB index stays at record lows of 16. Starts and permits are due out tomorrow morning and are expected to slide again after a one-time bounce as a result in a change in the New York City building code.

Credit jitters are rampant again after a Barron’s article predicted the Treasury will have to use its backstop facility to bail out Freddie and Fannie. That would dilute shareholders further, prompting the stocks to slump.

The Treasury earlier said they have no plans to use their backstop plan.