Futures are backtesting the SMA10, which has now passed below the SMA50 in addition to the SMA20. It’s normally a clear sign of an impending downturn. With tomorrow’s FOMC decision expected to be a non-event and the midterms just one week away, this is likely the calm before the storm.

WTI futures are similarly pausing after news of a diplomatic sit down involving Iran, Saudi Arabia, Turkey and Pakistan.

DXY continues to firm ahead of tomorrow’s FOMC decision. It will be interesting to watch Warsh repeatedly deny that the Fed is pausing another rate hike for political purposes.

As we’ve discussed in the past, the Trump administration obviously wants a smooth next week with all-time highs in the stock market to engender the kind of warm and fuzzies that will enable Republicans to retain control of Congress. This means a pause in the war on Iran, followed by an all-out, punishing blitzkrieg as soon as the midterms have passed.

Iran, which has maintained effective economic pressure through higher oil/gas prices, would rather not be annihilated by an angry, vengeful Trump who will most certainly blame them (and virtually everyone but himself) for his party’s losses. So, it makes sense that Iran would quickly pivot to a less combative stance that appeals to their regional counterparts.

Of course, a renewed assault on Iran, in itself, would put upward pressure on oil prices – increasing the war’s economic fallout all the same. Trump, never one to let peace, harmony and economic propserity get in the way of his lust for revenge, would thus ensure a worsening of the stagflation the US has been flirting with since he was reelected.