Who says the dollar’s weak?
US dollar’s influence on other asset classes — namely stocks and oil — is evident again this morning, even in the face of news that Warren Buffett is buying the big railroad Burlington Northern. With the dollar index higher, stock futures are lower, maintaining the balance that’s been in play lately: the dollar on one side, and everything else on the other.
If you were among the many who’ve shorted the dollar in recent months, and used the proceeds to buy stocks or oil, why take the risk today that the FOMC might say something tomorrow afternoon to rally the buck? Certainly, after last week’s 3.5% 3Q GDP print, it could happen. And there seems to be a spreading belief that the committee will “tweak” their statement — it’s hard to see them getting more dovish.
Meanwhile, Buffett’s back on the front pages, jumping into the growth industry of 130 years ago with his $44 billion acquisition of Burlington. Listen, any time the market hears Buffett, acquisition and $44 billion, it’s going to get excited. But, two things. One, despite Buffett’s comments that this is “an all-in wager on the economic future of the United States,” it’s hard for us to see any big ramifications for the economy; it’s a railroad. All he’s going to do with Burlington is count the cash flow.
Two, don’t take your eye off the dollar. It’s the fulcrum point these days, and that hasn’t changed yet.
FOMC meeting gets underway today, statement tomorrow around 2:15 p.m. ET. Stocks down in Asia and Europe. September factory orders due at 10:00 a.m.; October auto sales figures also due out later.
US dollar index up 0.6%. S&P futures down 6.80; DJ futures down 63. Ten-year higher, yield at 3.41%.
(Paul Vigna contributed to this post.)