Morning Note: Traders sanguine on a potentially volatile day...

Asian equities were mixed overnight, with 7 of the 16 markets we track trading lower. Europe's mostly lower this morning, with 13 of 19 in the red thus far. While you wouldn't know it by the Dow, up only 20 points (.07%) at the moment, U.S. stocks are in rally mode to start the day: The S&P 500 is up .45%, the Nasdaq's up .65% and the Russell 2000 is up nearly 1%. Remember, the Dow only represents 30 stocks...

Judging by the movement in US equity market volatility measures this morning, traders are feeling sanguine ahead of the Fed announcement on interest rate policy and big-"tech" anti-trust hearings in Washington. The VIX (SP500 volatility) is down 2.2% and VXN (Nasdaq volatility) is down 1.2%.

Oil's up .63%, gold's up $2, silver's flat, copper's down .22% and the ag complex pretty much split down the middle.

The 10-year treasury is down slightly in yield (up slightly in price) and the dollar's down (helping stocks) a bit.

As for our core portfolio, compared to stocks, it +0.17% is looking more like the Dow this morning, as some of our heavyweights, utilities and staples in particular, are presently taking it in the chin.

I've been writing this week about the role of the US dollar in the dynamics of the day, and how, should the dollar mount a large, sustained move higher, it would be likely do severe damage to asset markets, the world over. 

Here's from Lee, Lee and Coldiron's insightful and enlightening book The Rise of Carry on exchange rate (currency) volatility and hints at why it has to be the Fed's obsession going forward:

"...the extent to which the central bank is perceived to be prepared to suppress exchange rate volatility—can have an important influence on demand for credit in the economy."

More on this in our weekly message later today.

Have a great day!

Marty