Recession???

A negative jobs number has stoked the recession talks to fever pitch. The Fed is now on the clock as far as an interest rate cut; it appears to now be a question of when not if. Friday’s sell off in stocks has now set the August lows as the next potential inflection point. With the Fed meeting on the 19^th it will be interesting to see which comes first, the rate cut or the test of the August lows. The lows for the S&P 500 are in the 1360 area while the NASDAQ is around 2400.

If the Fed cuts the funds rate the consequence of that could be a weaker dollar. Below is a 20 year chart of the dollar and you can see the major support 80 is. A significant break in that number could lead to a multi-year down trend in the buck.

Gold tends to do well when rates and the dollar fall. As you can see gold broke out above $700 last week and that chart is looking very bullish. I do have to admit that the collective look of these charts puts a recession as a high probability. But then again the politicos are campaigning?