Market Talk

- Housing starts data offer mixed bag. “The good news is the excess housing inventory is being absorbed — a necessary step for housing (and the economy) to recover,” Calculated Risk says. “The bad news is economic growth will probably be sluggish — and unemployment elevated — until residential investment picks up.”

- Russell 2000 moves back above its 50-day moving average, while larger indexes still lagging, Bespoke Investment Group says. “Small caps will typically outperform in a rising market, and we’ve seen just that over the last few days.”

- Stimulus package celebrates one-year anniversary today. Obama defends the stimulus as he embarks on an effort to defend past and future economic programs, NYT reports.

- Fed officials last month were slightly more confident that the recovery was firming, WSJ reports. They also plotted an exit strategy that may include sales of the Fed’s mortgage holdings.

- Bloomberg details what Warren Buffett sold to buy Burlington Northern. (hat tip Abnormal Returns).

- Google (GOOG) might not be as immune to the weak economy as some think. Footnoted blogger Michelle Leder finds an interesting disclosure buried deep in GOOG’s 10-K filed late Friday: headcount actually shrunk last year for the first time since GOOG went public.

- Google got a bit too antsy with its Buzz launch, Michael Arrington writes. “The idea of jumpstarting the process and building the Google social graph right now was too tempting to Google, and they pressed too hard,” Arrington says. “Maybe some other company, seeing the results, will avoid this mistake in the future.”

- While we’re on the Google theme, when will the company actually make money off YouTube? MediaMemo blogger Peter Kafka weighs in, noting that time may come soon than later. “From the outside we can see indicators that the site is at least getting more serious about getting more ad dollars out of more videos.”

- Twitter’s growth continues. Site generated 73.5M unique visitors last month, up 8% from the 65.2M that visited in December 2009, Digital Daily blogger John Paczkowski reports, citing comScore data. “That’s an impressive spike and one that continues a three-month streak of gains that began last November, after a worrisome period of stagnancy between September and October,” he says.

- Tiger Woods will finally face the music as he plans a press conference for Friday.

US stocks essentially flat after the dollar’s overnight strength, which has zapped stocks lately, was blunted by Warren Buffett’s splashy acquisition of old-economy railroad Burlington Northern.

DJIA slips 18 to 9772, S&P 500 adds 3 to 1045, Nasdaq Comp gains 8 to 2057. Still, bulls are likely to take it as a positive, since in the misty hours this morning stocks looked like they were going to get nailed again. DJ futures were down nearly 100 points at about 6:38 a.m. ET (when I heard the market update on Bloomberg Radio on my way to the bus stop.)

But then Buffett comes along, mustering up all the heartland nostalgia he can, and says he’s buying the 77% of Burlington Northern he didn’t already own. Stocks strengthened, but never could get a rally going. They fell at the open, rallied, fell again, and finished mixed. What will be interesting to see now is how much staying power the enthusiasm over Buffett’s deal has.

The Oracle made a big deal out of this being a bet on the economy, and by some extension America. That’s a nice sentiment and it certainly plays well to the home crowd, but the reality is he made a business decision to buy a stable company that will pay off for him steadily over the years, but it has far less impact for the average American.

Elsewhere in America, J&J’s cutting up to 8,200 jobs. Not much heartland nostalgia in that move, and it shows that companies continue to retrench, which means less growth, which means less hiring, which means worse unemployment and underemployment and wage growth.

It’s nice that Buffett’s got a railroad to play with now. But it doesn’t mean much for Mr. and Mrs. America.

Not exactly a growth industry anymore.

An odd day for US stocks. Warren Buffett’s flag-draped acquisition of Burlington Northern is being portrayed as an “all-in” bet on the economy. That’s gotten plenty of attention from the business press, and, well, everybody really.

It’s amazing how when the economy’s on the downside, suddenly the folksy old guy from Omaha is current again. He couldn’t get the time of day during the dot-com boom, and who listened when he called securitized assets “weapons of mass financial destruction” in 2002? Nobody, that’s who. But when the world’s careening, there’s Buffett with a nice little editorial in the Times, saying, buy America, I am.

We have nothing but respect for Buffett, but this fawning is a bit much. He bought a railroad. Good for him. Go back and check out Burlington Northern’s third-quarter earnings and try to figure out how good it is for you.

Then why are stocks still down? Well, they haven’t been able to completely shake off the dollar-induced weakness from this morning, and there are still concerns surrounding the banks and, tech-related stocks, and J&J’s job cuts today show that employers are still cutting themselves down to size to fit into the new normal.

DJIA down 49, S&P 500 down more than 1, Nasdaq Comp down less than 1.

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.)