And the Kitchen Sink

October could be an interesting month -- containing a little bit of everything and then some. We could have geopolitical tensions with Iran; we have corporate earnings season; we're coming off back to back quarters of stock market increases that are among the best performances in the past 75 years; there is small talk of a second stimulus; we might have extensions to home buying tax credits and unemployment benefits; .... not to mention a possible overhaul of the entire healthcare system and legislation passing carbon emission controls!

To be honest, I'm not even sure where to start. Perhaps a few simple notes should do:

(1) Housing has been going gangbusters lately. Keep an eye to see if it STAYS stabilized. A few things could happen here. The first-time home buyer tax credit expires at the end of November and, absent an extension, is likely to result in less sales which could lead to more foreclosures and dampen home values. Not to mention that a new report estimates that 50% of people that revamped their mortgages under the federal 'home mortgage assistance program' will still be force to lose their home to foreclosure. However, as the market has struggled lately, mortgage rates have plummeted to all-time lows (30 yr fixed below 5%). That should help demand.

(2) Remember the US tarriff on tire imports from about 3 weeks ago. Well, it appears there is another tariff on importing solar panels now. See my post from a few weeks back talking about how tariff's are significantly troublesome to an economy, no matter how counter-intuitive that may seem. A growing protectionist nature is not a good sign.

(3) Continue to watch unemployment. No matter how many times people say its a lagging indicator, when its this bad, its a coinciding indicator. Even if it is lagging, something that lags for 12-18 months is bound to have an impact on present-day. Losing 200,000 jobs last month (or whatever number is announced tomorrow) is better than the 750,000 in January 2009, but its still horrible and a far way from job creation. 200,000 in job loses is more equivilent to the middle point of a normal recession.