Yes, the U.S. Jobs Report data was weak. That was the first shoe to drop. Now at 10:30am we have see the Factory Orders Report (durable and non-durable goods), which will tell us if in fact there is a softness in the economy.

Of course, mortgage applications and house sales and so forth are clearly indicating that the American people are growing increasingly concerned about their future. Cracks in the seams of global equity markets in recent weeks have added to the angst.

But the economic picture seems to be coming together that the business cycle in the U.S. is no longer expanding as rapidly as 2003-2005. Add that worry to a news report today that there may be a second ugly incident of the massacre of Iraqi civilians by U.S. soldiers, including numerous defenceless women and children, and I think that the mood in America is turning distinctly downbeat.

The early rally in equities today was jumped on " not because of a news report from Iran that they will enrich uranium or whatever " but because of new worries of the U.S. economy and the $USD.

These are worries of stagflation.

As you know, there is no greater fear in capital markets than stagflation.

Equity markets will boom after news of war, but they die in the face of stagflation.

If we can sit back and look at the big picture, traders have to decide if there is going to be a down cycle in the broad equity indexes from here and a counter-cyclical rally in the precious metal stocks. Or do they think that everything goes down the tubes together.

I think we are going to start seeing a split. I say that because I don't see hope for a strong $USD until the G-20 leaders (Finance ministers and central bankers) get together and hammer out an international agreement on currencies that would support sustainable growth in the international trade of goods and services.

So, until that agreement happens, I think that gold will rise, and the shares of the precious metal companies will rally. After that, I think the news of the day will be all about increased capex spending, real economic growth, and a new bull market. And that will be the time to drastically scale back on your gold, and to fully commit your cash to finance, tech, and consumer discretionary stocks.

I'll return after I review the Factory Orders report data, but so far, I see that forex traders are inclined to believe that a Fed rate pause is the most likely event later this month.