In a huge turnout, 11 million Iraqis cast their ballots yesterday in their parliamentary elections, which, if the estimate holds, would put the overall turnout at more than 70%.  The main story was the lack of violence.  The Wall Street Journal notes that the election marks a significant milestone in Iraqi politics since the fall of Saddam Hussein's regime.  It is the first political event deemed legitimate by a large swath of Iraqis, including Sunni Arabs who had shunned the political process, the Journal notes.

The asset category leader for the fourth quarter so far, aside from Internet stocks, is gold.  The metal is up almost 13%, quarter to date.  Traditionally a move like this signaled bad news – too much liquidity leading to inflation, or falling currencies, or recession.  But, not this time.  Inflation remains tame, the dollar is actually rising with gold, and the economy continues strong. 

The economy continues to expand, in spite of hurricanes, high energy costs, and Fed Funds rate increases.  The weeks’s crowded raft of economic reports was kicked off by housing.  The reports were mixed, but generally point to a slight cooling.  The National Association of Realtors reported Monday that sales of existing homes fell 2.7% in October to a seasonally adjusted annual rate of 7.09 million.  Houses stay on the market longer as the inventory of homes on the market rose to a 4.9 months' supply in October, from September's 4.6 months' supply.  Meanwhile, housing affordability dropped as the median sales price rose 16.6% on an annual basis to $218,000.  That was the biggest jump in 26 years. 

There’s a great deal of talk these days about a lack of trends and market leadership.  Most recently, homebuilding and real estate have driven the market, along with energy.  With interest rates rising and energy prices declining, the likelihood of these industries continuing their out-performance near-term is doubtful.  Additional leadership has come from investment banks and brokers as their earnings have increased on the rise of mergers and acquisitions.  But this activity is a bi-product of excessive capital and compelling market values.  Better allocation of capital and increased productivity will improve profits to a degree, but it will not significantly drive GDP.  Where’s the next big wave of real growth coming from?