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Hello and welcome to the Morning Filter podcast.

I'm Susan Chubinsky with Morningstar.

Every Monday before market open, I sit down with Morningstar Chief U.S. market strategist Dave Sikara to talk about what investors should have on their radar for the week,

some new Morning Star research, and a few stock ideas. Well, good morning, Dave. We'll wind it back to last week for a minute, starting with President Trump's nomination of Kevin Warsh as the next

chair of the Federal Reserve. So what's the market think of Warsh? Hey, good morning, Susan. Yeah, I got to say, it's really hard to tell at this point.

So we did have a pretty strong sell-off in the market last Friday.

But in my mind, I think there were a lot of other factors that led to that sell-off that were much more impactful.

I don't think that that was really necessarily a true implication of what the market may or may not have thought of Warsh. At this point, you know, just understanding, you know, who some of the other people were that President Trump was talking to. Comparatively, I think he's considered to be a much safer choice. If you look at the Fed Fund futures, there's really not much of a change in the probabilities as far as, you know, may not cut rates. Now in the past, he's been known as being much more hawkish. So I think that offsets some of the concerns that he may be too doveish here in the next couple of quarters. But at this point, we'll wait and see how it works out. All right. Well, let's touch base on what's been going on with the U.S. dollar and the dollar dropped to its lowest level since 2022 last week. How should investors be thinking about the weakening U.S. dollar? Yeah, I think it's worth watching, but based on where it's trading and how it's been trading, I'm not yet concerned about it. I think there's much more, you know, scaremongering, you know, clickbait headlines out there, you know, proclaiming a lot of doom, you know, but in my mind, the weakening here just really isn't indicative of, you know, foreign investors really losing confidence in the U.S. dollar, and it hasn't been enough to change our long-term intrinsic valuations on our equity research team.

So for an investor point of view, I'd recommend investors to go pull up a chart of the Dexie, DXY,

that's the US dollar index, and look at it in three different perspectives.

So first, just take a look at a short-term chart of the past year.

Yeah, I'd say we're coming down from relatively high levels

in 2024, but we've really been in a trading range since last April. And I think we're, you know, at the bottom of that range, you know, right now. Yeah, maybe we can go a little bit lower. But again, it's not like it's just falling off of a cliff. Then look at a five-year chart much more more of like a medium-term chart of the Dexie.

Yeah, we're really at the same level as we were in early 2020 and still well above where we bottomed out in mid-2021.

And then finally, a long-term chart.

I was able to pull up a chart going all the way back to 19.

Look at the dollar over long periods of time, like from 2003 to 2015.

The dollar was a lot lower that entire time period than where we are right now.

And, you know, we had a much higher, you know, dollar back when the tech bubble burst in

2001, 2002.

But really, that was just much more of a flight to safety at that point in time.

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