In the past six months, nearly every aspect of the economy has shown surprising strength, including auto sales, consumer confidence, weekly jobless claims, manufacturing, exports and retail sales.

Now, some of the smartest of the so-called smart money on Wall Street is betting on a recovery in the ultimate lagging sector: Housing.

Tuesday's housing starts data came in slightly weaker than expected, at 698,000 units. But January's tally was revised up and building permits jumped 5.1% to the highest level since October 2008. Much of the gain was in permitting for multi-family units. Single-family units rose 22,000 last month, its highest level since April 2010.

"The thinking is we've bottomed out and we're going slowly start rebounding in terms of pricing," says Greg Zuckerman of The Wall Street Journal. "Over the last couple of months some of the best investors on the street…have been making big bets on homebuilders."

Zuckerman cited SAC Capital, Blackstone and Caxton Associates as among the funds making big bets on homebuilders, like Beazer Homes (BZH) and Pulte (PHM). Generally speaking, homebuilder stocks have been on a tear, with the S&P Homebuilders Index (XHB) up nearly 70% since its October low while the iShares Dow Jones US Home Construction ETF (ITB) is up more than 75%.

Another GOP primary and another big test for Mitt Romney.

Romney, the GOP presidential front-runner with 521 delegates, could score a big victory in this Midwest state, where 69 delegates are up for grabs. A new poll conducted by Public Policy Polling gives Romney a 15-point lead over his main rival Rick Santorum in Illinois, and a 33-point edge over Newt Gingrich. Just one week ago national polls showed Romney with a razor thin advantage over Santorum.

David Chalian, Yahoo!'s Washington bureau chief, says Illinois is "friendly territory" for Romney and if the former Massachusetts governor doesn't win, "this is going to be a huge problem for him."

As Chalian points out in the accompanying video, Santorum already has a 10-point delegate disadvantage in today's GOP primary. Santorum's campaign was not able to file full delegate slates in every Illinois voting district. Santorum's problems in Illinois wouldn't have changed his circumstances, Chalian says. Romney's strength in this nominating contest has been the "moderate, suburban electorate," which Chalian says accurately describes the Illinois Republican primary electorate.