Money and Investing Thoughts

U.S. GDP rises 3.5% as stimulus kicks in – MarketWatch.

I think today’s GDP number of 3.5% gain in the 3rd quarter marks the end of the current recession. For background, the economy contracted at a negative 6.4% rate in the first quarter of 2009, shrank 0.7% in the second quarter and now has turned positive.

According to the government bean counters the recession officially started in December, 2007. Before this recession the post WWWII record length was 16 months. This one will be a record, but not by more than 6 or 7 months.

Remember that employment is the last factor to recover after then end of a recession. Typically it takes 6 to 9 months of improving economy before the job situation starts to improve.

Great video on Nixon before his resignation speech. Too bad that side of the guy did not come across to the public.

Check out this video from the Financial Times:

Banking with Bird and Fortune

“About the future of the world’s economy” Banker: “So long as it is about nothing important.”

Funny piece and probably pretty close to the truth.

HT: Felix Salmon

(MNR: 9.63 0.00 0.00%) is a nice little REIT that just keeps paying out that 15¢ distribution. Funds from operations were 48¢ for the 1st 9 months, handily covering the payout and a nickel above the results from last year. Nice to see a positive quote from a CEO about the direction of the economy:

“As we previously stated, we are aware that many economists and financial experts are less optimistic about our future economy than we are. There is little point in debating the matter. The direction of the US economy is improving. To the extent that we must make decisions today, we do so based on our optimistic evaluation of future developments.”

via Monmouth Real Estate Investment Corporation Reports Nine-Month Earnings.

http://www.sacbee.com/topstories/story/2080102.html

The Sacramento Bee article highlights some of the upticks that are occuring in the new home construction market. First, and interesting pickup by Lewis Homes in Reno, NV.

A Lewis venture – Lewis Investment Co. of Nevada – paid $6.6 million for lots that fell into bankruptcy court after the original developer, affiliated with CalPERS, invested more than an estimated $20 million readying them for homes. . . . .CalPERS lost nearly $1 billion on its investment in the partnership, which filed for bankruptcy in June 2008.

This seems to be a case of smart money coming in after thing have blown up and picking up good assets for pennies on the dollar. The 800 lot parcel will take 5 years to build out and sell.

Another interesting quote for a California homebuilder:

Multiple offers have spread now to vacant land for new homes, said Mark Rowson, Northern California president for Agoura-based Warmington Homes. He said, “A year ago nobody was talking. Now, there is movement.

An increase in construction activity will go a long way to stabilizing the employment market. There continue to be more signs that housing, both existing and new construction are starting to recover in California. Historically, builders in California build and average of about 150k new homes per year. This year they are on pace to build about 30,000. There is a lot of room for upside growth. If buyers and homeowners start to believe things are turning positive again, prices will start to increase in spite of the overhang of foreclosure properties.