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Pre-Market Primer: US Housing Market Improves; Intel Smartphone Revealed


And the Bank of Japan unexpectedly crashed Ben and Mario's monetary stimulus party.

MINYANVILLE ORIGINAL Stock futures advanced this morning after reports showing continued improvement in the beleaguered housing market.

Builders broke ground on homes at a rate of 750,000 per year in August, up from a downwardly-revised figure of 733,000 in July. Building permits beat expectations, slowing to 803,000. Economists expected a seasonally adjusted annualized rate of new home construction to reach 768,000 and permits to slow to 802,000.

At 10:00 a.m. today, we will also get a look at existing home sales last month. Experts predict that Americans were on track to buy 4.55 million previously-owned homes this year, up from a rate of 4.47 million in July.

Futures strengthened on the housing data. Dow (^DJI) futures advanced 0.13% to 13,516, S&P 500 (SPY) futures rose 0.10% to 1,454.40, and Nasdaq (^IXIC) futures gained 0.16% to 2,854.50.

The Bank of Japan unexpectedly increased its asset-purchase program to 55 trillion yen, following similar actions this month by the European Central Bank and Federal Reserve. The BOJ will mostly buy Japanese government bonds, regardless of yield. Japanese stocks rallied, and the yen fell to 78.9 to the dollar on all-too-welcome inflation expectations. The BOJ has been trying to tame deflation in the country for years.

One of Japan's problems at the moment is the current diplomatic furor over the Diaoyu/Senkaku islands. For the past few days, Chinese protesters have trashed Japanese businesses over Tokyo's decision to nationalize the disputed islands. Today, Jin Baisong of the Chinese Academy of International Trade, a part of the commerce ministry, hinted that China might attack Japan's bond markets. China holds $230 billion in Japanese bonds.

"It's clear that China can deal a heavy blow to the Japanese economy without hurting itself too much," he said in China Daily, a Communist Party mouthpiece.

China is Japan's biggest international creditor, but still, the vast majority of Japan's debt is held by Japanese banks and households. The coming trade war caused Fitch ratings to downgrade several Japanese exporters that engage in the $345 billion Sino-Japanese trade relationship. Another Chinese newspaper reported that China might again halt exports of rare earth elements that are so crucial to high-tech manufacturing in Japan.

David Viniar, Goldman Sachs' (GS) 12-year veteran chief financial officer, stepped down yesterday. His job will be filled by Harvey Schwartz on January 31, 2013, and Viniar will join the board of the investment bank.

Shares of Corning (GLW), the maker of Gorilla Glass that can be found in the Apple (AAPL) iPhone, rose 2.5% to $13.06 after Goldman upgraded its shares to strong buy from outperform.

Yesterday, Motorola Mobility (GOOG) revealed a smartphone powered by an Intel (INTC) chip. Aside from forgettable products in Europe and Asia, Intel has been playing catch-up in mobile. Smartphones and other devices usually employ weaker, but cooler and less power-hungry chips with ARM (ARMH) architecture.

Fed Chairman Ben Bernanke will have a private meeting with the Senate finance committee today.

Twitter: @vincent_trivett
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