This year the major U.S. markets have been driven largely by what has happened in oil markets. Higher oil means lower stocks, and vice-versa. Right?

Well, here is a graph of the correlation between oil futures and the S&P 500 on a daily basis for the current calendar year. As you can see, there have been two periods -- February and June -- during the year when oil really drove the S&P 500 down, and one period -- April -- when the S&P 500 rose merrily, despite higher oil prices.

Of late, however, the relationship between oil and the markets seems to have begun to break down -- which helps explain today's market weakness, despite a $4 drop in oil prices.

I was leafing through a recent NBER paper today when I came across a table comparing housing construction costs versus average sale prices in various U.S. cities. As you might imagine, there are huge premiums in most cities, but there are, however, a slug of cities where you can buy houses for less than it costs to build 'em.

Leading the list: Detroit, Fort Wayne, and Pittsburgh --- all places where you can buy homes for a 30% discount, or better, on what it costs to build new. That can't be good for the homebuilding business -- unless you think you can make up the difference on volume.

Source:

Housing Supply and Housing Bubbles
Edward L. Glaeser, Joseph Gyourko, Albert Saiz
NBER, July 2008

Here is a map of all U.S. cities where homes sell at a discount to construction cost. It's an interesting swath of the country.

Missed this news Friday, and so will react now to a note from American Airlines that it has decided to no longer feed its fares through aggregators Kayak and Sidestep. Here is message:

As a valued customer who has booked an American Airlines ticket through Kayak.com or Sidestep.com over the past year, we would like to inform you that American Airlines fares are no longer being displayed on these sites. You may still find our content through many other meta-search engines for purchase through our award-winning web site, AA.com. Tickets already purchased remain valid for customers traveling on American.

That's nasty news for those two (excellent) services, and somewhat baffling for AA. After all, what does it care so long as air travel gets sold? Granted, AA would like to sell at higher prices, and aggregators flatten the pricing market, which has to hurt. But the days of being able to break rank are over, aren't they?

Strikes me as sort of like having a cold, and then cutting off your nose as remedy. Sure, you could declare yourself cold free, but the side effects are gonna be nasty.

Here is Kayak shaking its head at AA's nutty behavior:

This morning, Kayak.com became a bit less comprehensive as fares from American Airlines are no longer available on our website. American asked us to suppress search results from online travel agency partners as a condition to displaying their fares on Kayak.com and SideStep.com. We remain committed to providing a comprehensive and objective display to our users.

Therefore, Kayak.com and SideStep.com are displaying schedules only (not prices) for American Airlines flights. Consumers are still able to compare AA itineraries along with those from hundreds of leading airlines, and if they wish to find the price or purchase an AA ticket, they can still do so by clicking on the “Info” link and we’ll send them into the Orbitz booking path. We think this is a step backwards for consumers and we hope American changes its mind.