The Feds have put themselves in an untenable position. With a recession looming and inevitable, they are stuck. If they cut rates, it will help the banking sector, specifically the regional banks, making the recession less painful.

Oil prices are dollar dependent so if the Feds cut rates too much, oil prices move higher. Oil is holding around $73/barrel up just a bit after the Saudi Energy Minister comment to “watch out”.

This graph is the last month, but take a look at the second graph spanning the last 12 months.