WallStreetWeather.net Forecast For Week Of July 6, 2009

Summary Of Last Week’s Influences:
A light volume holiday week and Uranus turning retrograde* brought some unexpected surprises that shook up the stock market. After the indices posted their best quarterly performance since the fourth quarter of 2003, more analysts are coming to believe that the market got a bit ahead of itself.

Uranus is futuristic, or what the market calls a leading indicator. Employment is viewed by the market as a lagging indicator as companies are reluctant to hire until after their business begins to show evidence of sustainable growth. With the “shock and awe” energies of Uranus dominating last week, the market was surprised that the jobs lost in June was about 100,000 more than the market anticipated. Saturn represents contraction, and Saturn in Virgo since September 2007 represents contraction in the workforce. Since the NBER officially declared that the recession began in December 2007, the number of unemployed since then has increased by 7.2 million. It is unlikely employment will begin to grow until Saturn leaves Virgo in July 2010.

The key piece of data from the June payroll report is that the average workweek dropped to 33 hours, the lowest level since data began to be recorded in 1964. This reflects companies retaining workers but reducing their hours. Less hours = less income, and less income = less money for discretionary spending. Another factor is that if a worker’s hours get reduced to part time status their healthcare coverage could be in jeopardy.

I had written in last week’s Forecast that Uranus retrograde could bring “computer system disruptions/outages.” The NYSE remained open until 4:15 PM Thursday in order to ensure that all orders were processed after “system irregularities” caused several stocks to be halted just after 10:30 AM for five minutes due to a technical glitch in the exchange system’s network. According to CNBC, all extended session trades at the NYSE had to be processed manually.

Uranus relates to rebellious and unconventional behavior. As Uranus represents sharp and rapid price spikes (in either direction), the transit since 2003 of Uranus in Pisces has brought sharp swings in the price of oil. WTI Crude hit an 8 month high of $73.38 on the futures market in the early morning on Tuesday following Brent oil’s spike from $71 to $73.50 in one hour after contracts for more than 16 million barrels were traded. According to the FT, that is about double the daily production of Saudi Arabia, and an extreme spike compared to the normal 500,000 barrels typically traded at that time of day. Oil was down 10% Thursday from Tuesday’s spike partly due to the fact that a “rogue” trader at PMV Oil Associates in London had accounted for at least half of the futures buying; other traders then climbed aboard thinking they must have missed some breaking geopolitical news.

Saturn in Virgo exactly conjoined California’s natal Sun (identity) on July 1, reflecting the state’s $24 billion budget deficit. Jupiter and Neptune conjoining California’s progressed** Sun in Aquarius reflect the inability of Republicans and Democrats to overcome their extreme political ideologies to make the hard choices necessary to break the budgetary impasse. This has forced California to issue its own currency in the form of IOUs.

Summary Of This Week’s Influences:
NOTE: For more information on this week’s influences, see my posts on “Eclipses and Other Planetary Pair Ups Will Bring Back The Bear Market By Autumn” and “Wall Street and the Consumer in Parallel Universes.”

The indices reached their high for the year on June 12, the last trading day before Jupiter turned retrograde. Since then the indices have been trading in a sideways but downward trend. We are now in the period between eclipses through August 5 that tends to create unsettled conditions and reverse trends. Although Tuesday’s Full Moon is a “milder” Lunar Eclipse, the Full Moon in Saturn-ruled Capricorn raises worries about the health of the consumer and residential and commercial real estate and their underlying securities. The Lunar Eclipse affects the USA’s natal Sun in Cancer and Saturn in Libra, reinforcing the theme of growth constraints.

Meanwhile Jupiter and Neptune conjoin in Aquarius for the second time. This planetary pairing played a big role in the market’s spring run up, but with both planets retrograde and separating after Friday, their influence now can exaggerate the pessimism seeping back into the market.

On a personal level, the second Jupiter/Neptune conjunction represents a good time to ask yourself, what is your truth? Are you willing to embark on a new journey into unexplored territory in order to free yourself of the illusions that can be comforting because they are familiar yet hold you back from bringing a vision into reality? The eclipse energies relate to this theme as they highlight the issues of personal needs, security issues, family, career and public reputation.

The week begins with Mars in Taurus challenging Jupiter and Neptune. Mars challenging Neptune shatters financial illusions, especially regarding credit issues. The last time Mars in Taurus challenged Neptune in Aquarius was on July 23, 2007 when the market reacted bearishly to Countrywide’s (BAC) earnings call after CEO Angelo Mozilo told analysts that “prime is not prime.”

Alcoa’s (AA) earnings release after Wednesday’s close marks the start of earnings season which will get fully underway next week. Saturn in Virgo conjoining Alcoa’s stock chart progressed Venus, challenging its Sun in Gemini, and a Saturn return in September will tend to keep the stock under pressure during this quarter. This earnings season the markets are going to need more than numbers and projections that were “less bad” than expected to compel the markets to move higher.

President Obama will attend the G8 meeting in Italy on Wednesday where Russia plans to resume talks begun at the April G20 meeting on creating a mix of regional reserve currencies as an alternative to the U.S. dollar as the world’s reserve currency. Brazil and China will send officials to the meeting that will also be attended by India’s PM Singh. Bloomberg reports that an economic advisor to Singh is urging the government to hold fewer US dollars in India’s foreign currency reserves.

The Treasury will sell $136 billion of “junk” this week, including $8 billion in 10 year TIPS on Monday, $35 billion 3 year notes on Tuesday, and $19 billion 10 year notes on Wednesday, and $11 billion in 30 year bonds on Thursday. Bernanke could never buy enough Treasuries to make up for reduced purchases of U.S. debt by sovereign nations should they decide to act on their rhetoric.

The market has a bearish bias, particularly during the first half of the week. The strong influence of the Jupiter/Neptune conjunction is likely to bring big market moves.

Monday, July 6, 2009
Negative.

Tuesday, July 7, 2009
Negative.

Wednesday July 8, 2009
Negative, but could see improving conditions approaching the close.

Thursday, July 9, 2009
Negative to choppy/mixed conditions.

Friday, July 10, 2009
Market improves as day progresses.

*Planets do not really move backwards, but appear to from Earth’s vantage point.

**A mathematical calculation that moves the planets forward in time as a method of prediction.

No disclosures.

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JPM CEO Jamie Dimon Should Know Protecting Consumers Is The Path To Long Term Profitability

Published by WallStreetWeather.net

As JPMorgan Chase (JPM) Chairman and CEO Jamie Dimon recently wrote in The Wall Street Journal (“A Unified Bank Regulator Is a Good Start”), “the gulf that grew between Wall Street and Main Street has hurt everyone.” That’s because regulators never chose to make the connection that having strong consumer protections would not only help consumers, but also protect banks from losing money due to their “innovation.”

The Obama administration’s proposal to create a Consumer Financial Protection Agency (CFPA) to regulate consumer financial products is a major component of its plan for financial regulatory reform. Big banks from JPMorgan Chase to thousands of regional and community banks are lobbying to defeat the plan as it makes its way through Congress.

Saturn symbolizes regulatory structures, the past, and the status quo. Saturn’s sojourn in Virgo represents the need to clean up the mess after the balloons burst at the credit party when Saturn in Leo completed its cycle opposing Neptune in Aquarius in late June 2007. From November 2008 through April 2010, Saturn in Virgo is opposing Uranus in Pisces. Both of these energies signal a major cleansing that must take place, as the failures of the past must be allowed to dissolve to make way for a new regulatory structure that serves the interests of everyone. Like Jamie Dimon’s op-ed, these energies also mean that those in authoritative positions will attempt to create the illusion they are for reform (at least in the areas that would benefit their business), while actively lobbying behind the scenes against any attempts at meaningful overall reform.

Pisces and its planetary ruler Neptune relate to addictions and credit. With the USA’s natal Mars in Gemini challenging the USA Neptune in Virgo, the banks would like nothing better than to keep Americans actively using credit to support the banks addiction to the interest and associated fees the cards generate. Lenders collected a record $18.1 billion in credit card penalty fees, a 69% increase from 2003, when Uranus entered Pisces. Banks keep raising fees and interest rates on cards to offset rising borrower defaults. According to Fitch Ratings, losses on U.S. credit cards hit a record 10.44% in June.

Gemini and Virgo are ruled by Mercury which is located in the area of the USA chart representing debt. With the USA Mercury in Cancer opposing Pluto, the planetary ruler of debt located in the area of the USA chart representing banking and finance, the voices of consumers have been overwhelmed by the money and power of the financial industry.

As the largest credit card issuer in the USA with card services comprising 23% of its managed net revenue by line of business,* JPMorgan Chase has a vested interest in mitigating any damages that the CFPA could impose on their fee and penalty generation. With his Sun in Pisces exactly opposing the USA Neptune in Virgo, it is unbecoming that Jamie Dimon will often speak of “doing the right thing,” yet this superstar of finance earns revenue by entrapping customers in products they don’t stand an even chance of escaping.

In essence the banks are running their own type of Ponzi scheme. After a bank collects an outrageous rate of interest and fees, Joe defaults. Now the bank will need to acquire Jane as a new customer to pay for Joe's loss, and so on. It was easy to attract new customers as home prices continued to rise, but the scheme unraveled in the post-bubble era of rising unemployment. (Saturn in Virgo represents contraction in the workforce.)

Saturn in Virgo represents government enacting regulations that particularly benefit what politicians like to refer to as “working class Americans.” Saturn in Virgo will transit the USA Mars and Neptune in August before forming a third opposition to Uranus in mid September. The House Financial Services Committee wants to complete work on the bill to establish the CFPA by the end of July to go to the Senate in September. House Financial Services Chairman Barney Frank told The New York Times: “Anyone who thinks we’re not going to create this agency is mistaken. The American public wants it.” After all the bad blood created by bank bailouts, does the usually politically astute Jamie Dimon and other financial institutions want to create a public relations nightmare for themselves by going against the tide of consumer sentiment? With Saturn opposing Dimon’s natal Sun in late August, this is not a good time for the JPM chief executive to actively oppose the government.

The Times writes that “Administration officials said the proposal would create a ‘level playing field’ and provide the same regulation for particular consumer products regardless of what kind of financial institution was selling them.” (Bolded emphasis mine.)

On October 29, Saturn will move into Libra, the sign symbolized by equally balanced scales representing fairness. Saturn rules foundations, and as Michael Barr, assistant Treasury secretary for financial institutions, told the Times: “The agency will be able to get to the root of the mortgage crisis that we saw in the past. It will be able to go in to examine, supervise the operations of previously unregulated parts of the sector.”

Pluto rules death and all types of debt. What good is a mortgage (mort=dead/gage =pledge) with an interest rate so high the homeowner cannot pay it and the home ends up in foreclosure? It hurts both borrower and lender. Saturn represents karma, the law of cause and effect. The cycle of Saturn in Libra challenging Pluto in Saturn-ruled Capricorn beginning in mid November will bring further lessons to financial institutions who beyond receiving government assistance, have a societal obligation to correct the damage they have done. Saturn conjoining the USA chart’s Midheaven (Obama Administration) and Saturn and Pluto challenging the USA Venus (banking and finance) over the next year will bring greater regulation to the financial industry, forcing profits to come from a return to more conventional or conservative banking. The Pluto in Sagittarius (1995-2008) era of laissez-faire finance is finished.

If as Dimon writes, banks are to “re-earn the trust of the American people,” then JPMorgan Chase and all the other financial institutions opposing the creation of the CFPA should “do the right thing” now and stop increasing rates and fees in order to squeeze as much short term profit while they can before the CARD legislation takes effect in February. Decimating the banks retail customers is never a way to generate long term profitability for the institutions, as recent history has aptly demonstrated. In reality, the Consumer Financial Protection Agency will save banks from themselves.

*Following JPM’s acquisition of WaMu. Source: Jamie Dimon Letter to Shareholders, 2008 JPM Annual Report.

No disclosure.

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WallStreetWeather.net Forecast For Week Of June 29, 2009

Summary Of Last Week’s Influences:
Last week opened bearish as the World Bank’s downgrade of GDP growth had the same effect as when the IMF lowered its economic growth forecast one week prior.

The Federal Reserve’s statement Wednesday reiterated its intention to keep rates at its “exceptionally low levels for an extended period,” since the Fed “expects that inflation will remain subdued for some time.” Bernanke tried to calm the bond market by saying the Fed will “make adjustments” to its credit and liquidity programs “as warranted” to show he has an exit strategy. The problem is that few people believe him. The following day the Fed announced it would extend its lending programs for the commercial paper market (CPFF & AMLF) through February 1, 2010, while reducing the size of its TAF auctions noting that conditions in wholesale funding markets have improved.

With the Sun opposite Pluto falling on the Fed’s natal Sun opposite Pluto, scrutiny has turned to the Fed’s secretive (Pluto) actions taken during the financial crisis, and specifically by the Chairman (Sun). Ben Bernanke got grilled for just over three hours on Thursday by the House Oversight and Government Reform Committee over the Fed’s involvement in pushing Bank of America (BAC) to complete its agreement to purchase Merrill Lynch.

Discontent with the Fed Chairman is growing on both sides of the aisle, but the Street is pushing for Bernanke’s reappointment because he is against the Obama Administration’s plan to create a new Consumer Financial Protection Agency that would take away the Fed’s authority to regulate consumer financial products. With bank fees comprising 53% of the industry’s income in 2008 vs. 35% in 1995, you can understand why Wall St. wants someone who solely supports the industry. The Fed should be audited on all its special lending programs, but despite the damage caused to the economy by its current and former Chairman, it is necessary that the central bank retain its independence.

In last week’s Forecast I wrote that “anecdotal reports of economic contraction” would keep the market lower on Friday. Quantas canceled its order for 15 Boeing (BA) Wet-Dreamliners and is delaying delivery on 15 more. Economic reports supported the premise of my post on “Wall Street and the Consumer in Parallel Universes”, as the personal savings rate in May was the highest since December 1993. And it appears that the slight boost in personal income was due to a onetime gain of stimulus checks to seniors. People rebuilding their balance sheets is vital to rebuilding a healthy and sustainable economy, but the market’s reaction shows it is not ready to face that reality. While the University of Michigan’s Consumer Sentiment was the highest since February 2008, the boost came from current expectations, as people’s future economic expectations were lower. This is downbeat news for markets that are always focused on the road ahead.

Summary Of This Week’s Influences:
“Expected the unexpected” this week as Uranus in Pisces turns retrograde* on Wednesday until December 1. The planet symbolizing independence and eccentricity is pronounced June 26 through July 6, just in time to celebrate U.S. Independence Day. Uranus in Pisces is out to shake the world up from its slumber of outmoded beliefs as it dissolves preconceived barriers of separation. This is particularly taken to a personal level while Uranus is retrograde. (As Uranus again approaches opposition to Saturn in Virgo in September, this will become even more evident.) Pisces and its planetary ruler Neptune represent the interconnectedness of all things. For example, the housing bubble could not have happened without the participation of individuals, realtors, appraisers, lenders, institutional investors, politicians, and government regulators – especially the Federal Reserve.

The interconnectedness between Uranus and Pisces and Neptune in Uranus-ruled Aquarius is dominated by Jupiter again conjoining Neptune in Aquarius. Neptune represents illusions, and Jupiter is expanding that. With such a short time span between the first Jupiter/Neptune conjunction on May 27 and the next one occurring on July 10, Bulls hope the market is just resting in a sideways position until second quarter earnings news propels the indices higher. Venus (July 1-2) and Mars (July 6) in stubborn and slow moving Taurus will be challenging Jupiter/Neptune just before their next conjunction. Mars is action; Mars in Taurus might decide it’s time to at least take some gains off the table. As an earth energy, Taurus recognizes that a profit is not real unless the money has been deposited into their bank account. As Jupiter and Neptune begin moving apart, the market’s optimism might begin to wane.

It could be a wild Wednesday with Uranus turning retrograde and Mercury in Gemini challenging Uranus could bring some shocking news. These energies can make people jittery and highly excitable. Focus on one thing at a time to keep your mind clear of clutter. Ensure that all electrical devices are fully charged and back up files, as these energies can bring electrical and computer system disruptions/outages. Freaky weather conditions (these energies create high winds) could suddenly arise that create travel delays. Mercury harmonizing with Jupiter and Neptune can inject some humor and creativity to work around any inconveniences. With Venus challenging Neptune today, there could be unrealistic expectations about money and love. Inflation could be a concern.

The abbreviated holiday week begins with the First Quarter Moon in Libra, symbolized by the scales of justice. Even if Bernie Madoff receives the justice he deserves (the government’s recommended 150 years in prison) Monday morning, I believe that Madoff did not completely act alone. The scales will not be balanced until the people who assisted Madoff face justice as well.

Monday, June 29, 2009
Mostly choppy/mixed as market swings indecisively from negative to positive. (Now I sound like I just attended the Alan Greenspan School of Communication!) :-)

Tuesday, June 30, 2009
Negative trend bias.

Wednesday, July 1, 2009
Uranus turning retrograde and other planetary pair ups create mixed signals that could create more volatility in either or both directions, but tendency is toward the downside that may have a late day turnaround.

Thursday, July 2, 2009
Positive trend bias.

Friday, July 3, 2009
Market closed for Independence Day tomorrow. Mercury enters Cancer until July 17. Thoughts and news focus around food, real estate, and economic and physical security. Mercury opposes Pluto in Capricorn which can create disagreements over debt issues, as well as geopolitical tensions over nuclear issues and state secrets.

*Planets do not really move backwards, but appear to from Earth’s vantage point.

No disclosures.

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Bernanke Claims Fed Acted With “Highest Level of Integrity” In BofA/Merrill Deal

Published by WallStreetWeather.net


“Was Bank of America forced to go through with the deal, or was this just an old fashioned shakedown? These questions are particularly important given the Administration’s new proposal to give broad, new powers to the Federal Reserve. It’s time to yank the shroud off the Fed and shine some light on these events.” – House Oversight and Government Reform Committee Chairman Edolphus Towns

Suffice it to say I enjoy hearing people articulate the message of planetary alignments! In “Obama’s Regulatory Reform Removes the Punch Bowl from the Fed,” I wrote:

“The Sun/Pluto opposition is transiting the Federal Reserve’s natal Sun in Capricorn opposite its Pluto in Cancer, reinforcing the need to shed light on the Fed’s secretive dealings and restructure its identity.”

The Sun represents leaders, and the Summer Solstice/Cancer New Moon opposing Pluto in Capricorn this week is shining the spotlight on Ben Bernanke’s performance as Fed Chairman. Asked by reporters during news conferences this week if Bernanke is doing a good job, President Obama and the White House press secretary have uttered tepid support for the Fed Chairman.

One area that is gaining bipartisan support in Congress is the suspicion that the Fed Chairman has not been forthcoming about the secret deal Bernanke and former Treasury Secretary Hank Paulson struck with Bank of America (BAC) CEO Ken Lewis to ensure BofA consummated its purchase of Merrill Lynch.

Following Ken Lewis’ testimony before the House Oversight Committee two weeks ago, Bernanke vigorously defended his actions before the committee yesterday, saying he “had nothing to regret about the whole transaction” and he “acted with the highest level of integrity under highly unusual circumstances.” Throughout the hearing the Fed Chairman emphasized that if the deal failed to go through, it would have injected broader systemic risk into an already fragile financial system. Bernanke’s remarks insinuated the end justified the means. Bernanke said that financial conditions have improved since then, Merrill has become profitable now for BofA, and BofA never needed ringfencing on a $118 billion pool of mostly Merrill assets and now believes the protection is no longer needed.

Despite being appointed by President George W. Bush, Rep. Darrell Issa, the ranking Republican member of the committee, accused Bernanke of a “cover up” in response to his denials that he did not say nor did he tell Paulson to tell Ken Lewis that Lewis and BofA’s Board would be fired if Lewis invoked a MAC (material adverse change) clause to break the deal with Merrill. When Bernanke was asked if Paulson lied giving his deposition to New York AG Cuomo that Bernanke had told him to tell Ken Lewis that he and his Board would be fired, Bernanke responded that he believed Paulson had “modified that statement” after the deposition. (It will be interesting to hear what Paulson says when he testifies before the Committee in July.)

As the hearing went on, Bernanke more frequently answered questions by saying he “didn’t recall.” When Rep. Dan Burton questioned Bernanke, he remarked that it’s been his experience that “people often use such language to avoid perjuring themselves.”

When Rep. Burton asked Bernanke if Richmond FRB president Jeffrey Lacker was “lying” in a Dec 20 email (see page 2) that “management is gone” if Lewis invokes the MAC, Bernanke responded that Lacker was “summarizing a long conversation,” so he couldn’t remember if he “did or did not” say that. Rep. Jason Chaffetz wanted to know how Bernanke “advising” Lewis not to invoke the MAC was not a threat. Or as Rep. Elijah Cummings described the committee’s conclusion of the hearing with Ken Lewis: “There was not a person in this room who didn’t understand Ken Lewis was not threatened.” Bernanke insisted that Ken Lewis always had the ability to exercise his free will as “We don’t control his destiny unconditionally.”

In trying to gauge Bernanke’s defense that systemic risk warranted the actions that were taken, Bernanke was asked if it was the Fed’s decision to allow Lehman to fail. Despite the Fed’s authority under Section 13.3 to lend to “any individual, partnership, or corporation” in “unusual and exigent circumstances,” Bernanke once again cited the Fed had “no legal authority” to lend to Lehman. He said that only after Congress passed the TARP were the tools available to have saved Lehman. (Bernanke conveniently forgot the Fed invoked Section 13.3 to prop up AIG 48 hours after Lehman collapsed.) Bernanke also said he had “no way to compel Ken Lewis to buy Lehman.” On AIG, Rep. John Tierney told Bernanke that “the Fed rolled over and paid out to the banks” when it should have negotiated with AIG’s counterparties. Tierney requested copies of all documents related to the Fed’s deals with AIG’s counterparties, contracts, and documents related to the creation of Maiden Lane III.

Rep. Jim Jordan wanted to know when Bernanke knew the TARP wouldn’t be used to buy toxic assets. Bernanke said he found out 10 days after Congress passed the bill, explaining that the global banking crisis required “a complete change of strategy”* and the program “would take some months to put into operation.” Bernanke said he was not in contact with the nine bank chief executives that Paulson called to Washington on October 13 to take TARP as “it was Paulson’s decision.”

Bernanke said he “initially thought there might have been some attempt by Ken Lewis to get a subsidy,” by threatening to invoke the MAC, but after meeting with him he got the impression Lewis was “genuinely undecided” about whether or not to go forward with the deal. Rep. Dennis Kucinich questioned the Fed’s judgment in providing additional financial support to BofA without demanding management changes recommended by Fed staffers as the Fed became aware of Merrill’s accelerated losses in mid November. Bernanke said he didn’t know the amount of Merrill’s losses as the Fed was involved in Merrill’s oversight in a “light way” since Merrill was not a bank.

Bernanke was questioned why the Fed did not inform the SEC about the situation. Bernanke made it clear that “we all have our spheres of responsibility” and that it was BofA’s responsibility to inform the SEC. He said the regulators most relevant to the deal were FDIC Chairman Sheila Bair and OCC Chairman John Dugan whom he personally notified. Bernanke said When Rep. Jackie Speier commented that “we’re all one government,” Bernanke replied that he “followed the law exactly” as the Fed’s disclosure requirements are “explicitly set out in the Emergency Economic Stabilization Act of 2008” that requires the Fed to publicly disclose lending money to a financial institution within one week of the loan.

When asked by Rep. John Duncan if the Fed is operating with too much secrecy, Bernanke defended his "enormous strides under my Chairmanship to expand the information we release." Bernanke expressed his concern that a complete audit of the Fed by the GAO could compromise the Fed’s independence and interfere with monetary policy.

As Committee Chairman Towns said in his closing remarks: “We got a peek but don’t have full sunshine yet.”

*If Bernanke understood planetary cycles, he could have said: “Look, Mercury was retrograde then. New endeavors begun when Mercury is retrograde tend to turn out different than originally anticipated. Plans tend to get changed or reversed.” ;-)

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Lloyd Blankfein’s Golden $40,543 A Year Health Insurance

Published by WallStreetWeather.net

The Sun is our life force and represents our physical vitality. The zodiacal sign Virgo rules health matters. People born with the Sun and/or other planets in Virgo have a tendency to worry about their health and would want to insure they have access to every available resource at their disposal.

With his Sun in Virgo, Goldman Sachs (GS) Chairman and CEO Lloyd Blankfein’s credo must be you can never be too rich or have enough health insurance coverage. Blankfein’s health insurance is valued at $40,543 a year, which I would think should be enough to cover every possible exam, test and treatment for every ailment covered in the Merck Manual. And in what could only make a penny pinching Virgo absolutely drool with envy, Goldman pays for Blankfein’s health insurance even though he received $73.72 million compensation in 2007.*

Does it really cost $40,543 to get truly comprehensive health insurance in America? As The Wall Street Journal explains in “Going It Alone When Buying A Health Policy,” insured individuals are finding out the hard way that even a policy with lifetime coverage of $2 million does not mean your insurance company will pay your claim.

Tina Smith had that lifetime coverage benefit from Assurant. But what she didn’t know until after she ran up $86,000 in uncovered medical bills to treat her lymphoma was that buried within her policy was a $5,000 annual limit on what Assurant would pay for outpatient treatment (medical care when a patient hasn’t been admitted to a hospital).

Ms. Smith’s example is why looking at a policy’s premium and copay/deductible costs only comprises part of what you need to know when evaluating a health insurance policy. You also need to understand what the insurance policy’s annual out-of-pocket maximum (the total dollar amount you will spend in a year) is, as well as what the policy’s benefit limits and exclusions are. This information can only be found by thoroughly reading the policy’s “certificate of coverage” (also called the “evidence of coverage”).

If our “free market” health insurance system is so efficient and easy to understand, then why does the Journal advise consumers to “discuss policy provisions that you don’t understand with an agent or another expert”? After reviewing my own nearly 200 page certificate of coverage, I realize that our current private insurance policies are far too complex for anyone to truly understand what they’ve purchased.

A person might sincerely believe they have disclosed all of their medical history and potential health issues on an insurance application, but once a policyholder puts in a claim of any size or begins treatment for a costly disease, the insurance company will use your doctor as a weapon against you by trying to get the doctor to say that your ailment or teeny tiny spot detected on a diagnostic test could have been present before you became a policyholder. Regardless of how many years you’ve had your policy, the insurance company can deny your claim or rescind your policy altogether.

Because very few of us will ever have a policy that offers the level of coverage like Lloyd Blankfein’s, America needs a government option or better still open up the government run healthcare program known as Medicare to all ages so no one can be rejected for coverage, everyone will know exactly what coverage they have and how much it costs, with basic health coverage offering premiums that people of all income levels can afford.

If the government could pull out all the stops to wave its magic wand just before the stroke of midnight last September to prevent the Golden One’s riches from turning into rags, Congress should at least provide the American people with these basic rights, along with the peace of mind that unlike the “free market” world of private insurers will not deny treatment that is supposed to be included in their insurance policy.

*Blankfein’s 2008 compensation was $25.84 million.
Lloyd Craig Blankfein: September 20, 1954 time unknown Bronx, NY

Related Post: Full Moon Fever: WSJ Editorial on Healthcare “Mergers and Inquisitions”

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Eclipses and Other Planetary Pair Ups Will Bring Back The Bear Market By Autumn

Published by WallStreetWeather.net

Every time I read or hear another market analyst proclaim that the recent rally will face a correction but that correction will not break the S&P’s March 6 666 intraday low I say “I wouldn’t be so sure.”

Monday’s Wall Street Journal remarked that only “the real pessimists worry that stocks could fall to new lows by autumn.” But now that the “too far, too fast” three month rally is showing fatigue, the Journal quotes Phil Roth of broker Miller Tabak who thinks the DJIA could hit 9,000 before falling below its March 9 closing low of 6,547.05.

Beyond the technical factors cited in Monday’s article and yesterday’s “Markets Fall on Growth Fears” is that the market is likely entering a choppy to corrective phase; planetary factors provide the potential for a bigger market correction than anticipated. Since the Journal reviews the technical factors that brought the markets to this point, I’ll first review the planetary influences that correlate with the market’s rapid rise from March.

When Venus (banking and finance) turned retrograde* on March 6, market sentiment was braced for nothing short of financial apocalypse and the S&P fulfilled those expectations that day when it dropped to an intraday low of 666. But retrogrades tend to reverse sentiment. After the DJIA and the S&P made 12+ year closing lows on March 9, shorts began covering in a market turnaround after super TARPed Citigroup declared the following day it made a profit in the first two months of 2009. Other banks soon declared that they too were profitable and began talking about repaying the TARP. The government demonstrated that their policies during the crisis created even bigger behemoths that were now considered truly too big to fail. Indeed, even non financial companies could now be classified as a “systemic risk” to the economy. And perhaps the government’s stimulus package would restart spending after all.

With Venus in impulsive and fast moving Aries until June 6, stocks and commodities continued to surge after Venus turned direct April 17, as Mars was about to enter Aries (April 22-May 31). Planets in Aries like to get in on the action first. These energies reflect the belief that if you wait until economic fundamentals are evident, those “green shoots” would have grown into a full crop.

Jupiter expands and Neptune inflates and with these planets approaching conjunction May 27 in Uranus-ruled Aquarius, deflation concerns where rapidly rolling over to inflation. To the Bulls, higher commodity prices reflected growing demand in China and other emerging markets. Jupiter’s optimism combined with Neptune’s world of foggy fantasy in airy Aquarius reinforced the attitude of Venus and Mars in Aries that fundamentals don’t matter. Economic news that was “less bad” than expected was a cause for the market to take another leg up. And with Jupiter and Neptune conjoining the USA’s natal Moon (consumers), Bulls didn’t see why that extra $10 of stimulus in workers’ paychecks wouldn’t translate into more retail spending. Bears went into commodities and shorting U.S. Treasuries as a hedge against the mountain of debt issuance by the U.S. government and the Federal Reserve’s monetizing the debt.

Venus rules Taurus. As Mercury (communications), Venus (values), and Mars (action) were in Taurus the week of June 8, the market continued to gain but at the much slower and steadier pace of this fixed earth sign. Venus’s dominant energies since early March reflect that the biggest gains came in the banking sector. On June 12, the S&P had made a 40% gain from its early March low.

Jupiter turned retrograde June 15, reversing some of those “optimistic assumptions.” And now here we are one week later with the Sun in Cancer opposing Pluto in Capricorn to show that there’s still plenty of debt (Pluto) and continued economic contraction (Capricorn) that can put a damper on stock market (Sun) sentiment (Cancer which is ruled by the Moon).

Market strategists quoted in the Journal article provided their projections through autumn, and I will now give an overview of the major planetary influences on the market from now to that time with more details in upcoming posts as each influence gets closer.

Whether bullish or bearish, there seemed to be consensus among the strategists that at least a 5-10% correction is upon the market. I would tend to agree with John Schlitz, chief technical strategist at Instinet, who said there will be a bit more upside and then some “very frustrating, choppy trading in the summer, setting up for a traditional October low.”

Market pundits (along with planetary pundits such as yours truly :-) ) need to stay focused to the fact that strong Uranus energies are a wakeup call to expect the unexpected. Whether the market makes its fall in September, October, November, or a bit sooner or later than that doesn’t change the overall theme outlined as a probable scenario. Saturn the ruler of tradition is opposing Uranus through mid-2010 and most of the time Uranus has more leverage.

The energy of Uranus in Pisces will be more pronounced June 26 through July 6 as it turns retrograde on July 1 (until December 1) in what could be a “wild Wednesday." Uranus creates volatility; a rollercoaster ride that can send prices lower or higher faster than anticipated. Mars in Taurus challenges Jupiter and Neptune on July 6 which could raise questions about credit issues as well as CMBS which is part of the next wave of the financial crisis.

During an eclipse the Sun or Moon’s light is concealed by the Moon (Solar Eclipse) or the Earth (Lunar Eclipse). The period one week before and between eclipses is not a favorable time to make decisions as the light being blocked symbolically represents that we do not have all the information we need to make a sound decision. Eclipses are harbingers of change, and things tend to be seen in a whole new light beginning a week after the eclipses have passed.

Eclipses don’t always have a profound effect on the market right away, but the July 7 Lunar Eclipse, July 21 Solar Eclipse, and the August 5 Lunar Eclipse all impact key planetary energies in the charts for the New York Stock Exchange and the USA. Pluto rules debt and the Solar Eclipse in Cancer (consumers/real estate/domestic security) falls in the area of the USA chart representing debt, opposing the USA’s natal Pluto in Capricorn in the area of the USA chart representing the financial system. Foreign governments could be shedding their holdings of U.S. debt. With the Moon ruling the area of the Solar Eclipse chart representing the stock market, market sentiment is very changeable.

The Solar Eclipse also conjoins the Federal Reserve’s natal Neptune. These aspects indicate the next financial crisis has arrived, and once again the Fed is not only asleep at the wheel, but preoccupied with keeping a grip on its power to hold onto regulating consumer credit (Neptune), and could be trying to prevent a scandal erupting over its handling of AIG and the Bank of America/Merrill Lynch deal.

Mars in Gemini challenges Saturn (August 10) and Uranus (August 18). These energies tend to depress the market and create volatility, especially because Mars triggers the energies of Saturn in Virgo opposing Uranus in Pisces. Saturn in Virgo seeks to create greater efficiencies within the bounds of current governmental and societal structures. Uranus in Pisces promotes the need to dissolve status quo systems that have become obsolete and replace them with something new that benefits everyone.

The planetary energies in September share similarities to the energies of September 2008. Mercury will turn retrograde on Labor Day, the exact place where it went direct on October 15, 2008 which was the same degree as the September 29, 2008 Libra New Moon. That was the day the Dow dropped almost 800 points after the House failed to pass the TARP bill.

On the one year anniversary of the collapse of Lehman Brothers, Saturn will oppose Uranus for the third time. The first Saturn/Uranus opposition occurred on Election Day and the second took place on February 5, 2009. The market was bullish on those days, but on both occasions the major indices made multi-year lows within one month of the opposition. The September 18 Virgo New Moon occurring on quadruple options expiration day will accentuate these energies as the Sun and Moon conjoin Saturn and oppose Uranus. Both the USA and the New York Stock Exchange charts will be affected, and Mars in Cancer will reactivate the issues present around the July 7 Lunar Eclipse.

Mercury retrogrades back into Virgo on September 17 where it will rendezvous with Saturn on September 22, the day of the Autumnal** Equinox and the FOMC meeting, and oppose Uranus the next day. News could depress the market and then create volatility to the upside the next day. Mercury turns direct conjoining the USA Neptune and challenging the USA Mars, highlighting military matters and foreign relations, as well as facts that turn out to be fiction or based upon incomplete information.

Jupiter turns direct on October 13. Jupiter usually creates big market moves, and its direct station tends to be optimistic, but Venus conjoining Saturn the same day can create financial fears. Mars reactivates the themes surrounding the July 21 Solar Eclipse on October 15.

On October 29, Saturn will enter Libra for six months and then again from July 2010 to October 2012. On November 15, Saturn will make the first of several challenging alignments to Pluto in Capricorn. The transit of Saturn in Libra is to teach the lesson of balanced financial relationships and rules and regulations that are fair to all parties. Saturn challenging Pluto will expose not only who is not playing fair in the corporate/financial world but also in government, which could create market turmoil.

*Planets do not really move backwards, but appear to from Earth’s vantage point.

**CORRECTION made 6/24/09 at 7:35 AM: I had originally written Vernal Equinox by mistake. (The Autumnal Equinox marks the first day of fall in the northern hemisphere and the Vernal Equinox marks the first day of spring.)

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WallStreetWeather.net Forecast For Week Of June 22, 2009 (Summer Solstice/New Moon Edition)

Summary Of Last Week’s Influences:
Last week’s Forecast discussed how Jupiter’s pronounced energies Monday through Wednesday would likely result in larger market moves in either direction. Jupiter prefers to operate under the auspices that the glass is half full, but Jupiter appearing to turn retrograde from Earth’s vantage point can affect financial markets by reversing the trend, as planetary retrograde periods create a shift in perception.

As I’ve written many times, Jupiter is the principle of expansion. Contrary to my daily prognostications last week, Jupiter turning retrograde Monday expanded the impact of comments made by Treasury Secretary Geithner at last weekend’s conference of G8 finance ministers when he remarked that economic conditions have a “way to go” before the U.S. can begin to pull in liquidity. Then the IMF called the Administration’s economic assumptions “optimistic,” believing the U.S. economy will stagnate between now and the second quarter of 2010 when the recovery should strengthen. (I think the IMF is a bit ahead of themselves; push the forecast back to Q42010-Q12011 for a sustainable recovery.) Jupiter emphasizes foreign relations, and the dollar got a boost after Russia’s finance minister made positive remarks about the dollar’s solid status as the world’s reserve currency following the G8 meeting.

With Jupiter conjoining Neptune, the commodities bubble has been rebuilding itself as bulls wanted to get in on the economic recovery early and bears sought to protect themselves from the inflation created by the growing mountain of U.S. debt and the Fed monetizing it. “Commodities reverse on resurgence in the U.S. dollar which rekindled worries about the U.S. economy,” was how The Wall Street Journal described Monday’s pullback. (Italics mine.)

The glass half full looked too empty Tuesday after a Morgan Stanley strategist said “the rally may now be over”, and Goldman’s chief economist said the correction could go on for a few weeks as financial markets may weaken on concerns about government intervention.

On Wednesday some of the original TARPed banks – Bank of New York Mellon (BK), Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), and State Street Corp. (STT) repaid the Treasury. (The banks still want to buy back the government’s warrants.)

The indices became choppy/mixed late in the week, trying to figure out whether to stay with the market or take profits before they get eroded.

Summary Of This Week’s Influences:
I view the phase we’re in now akin to the intermission during a multi-act play or being in the calmer eye of the hurricane. Act I saw the fall of several major financial institutions and the government’s ad hoc efforts to stop the bleeding. Things have seemed fairly calm compared to the tumultuous turmoil of last autumn.

While financial markets have made an impressive recovery, none of the government’s programs in place effectively deal with fixing the root of the problem. Now we are preparing to enter the second act or as anyone who has experienced a hurricane will tell you, the worst part of the storm occurs after the calm of the eye passes over. Beyond the next wave of problems in credit cards, credit derivatives, and consumer and commercial real estate, reforms that rebuild our economic structures cannot be postponed any longer. While it was a major mistake for President Obama to retain the Bush Administration’s economic players, policies, and programs, the President recognizes that it is his mission to overcome what he calls the “it is never the right time” mentality for making sweeping reforms that might be initially painful but can help the nation break free of these boom/bust cycles that even NEC Director Larry Summers has acknowledged have become an all too frequent event. President Obama has made reforming healthcare and financial regulation the key drivers to putting the economy back on a path to sustainable long term growth.

The cardinal (action-oriented) signs* mark the seasonal turning points of the year. Summer began in the northern hemisphere today when the Sun entered Cancer (until July 22). What makes this Summer Solstice time more powerful is that the New Moon in Cancer occurs on Monday (3:35 PM EDT), making the next month a time to begin to make major changes.** Cancer and its ruler the Moon rules consumers and domestic security as the Moon and Cancer represents the need for physical and emotional security. So it’s only natural that these energies rule the most emotionally charged areas of our lives: food, family, and the “American Dream” of home ownership. And nowhere in the world are these issues more emotionally charged than in America, born with the Sun (self-identity), Mercury (communication), Venus (money and values), and Jupiter (abundance; philosophy) in Cancer.

Two planetary pair ups dominate at this time: Venus and Mars conjoin in Taurus, the sign of banking and finance, and the Sun in Cancer opposes Pluto in Capricorn.

Venus conjoins Mars today, and tomorrow the two planets harmoniously interact with Saturn in Virgo. With these planets in the practical earth element, this is a fantastic time to take action to build or rebuild a solid and secure financial foundation. Banks should not wait for Congress to pass regulatory reform; they should be getting back to basic banking now. In the future banks will operate more like utilities by enriching their shareholders with stable earnings and juicy dividends, replacing growth based on financial alchemy and stock buybacks that only enriched their top executives.

On a personal level, the Sun/Moon and Venus/Mars conjoining at the same time not only help to balance expressing the male and female energies within ourselves, but particularly in an intimate relationship. You and your partner will be in sync regarding what you value and enjoy the simple pleasures of each other’s company.

The Sun opposing Pluto provides the determination and willpower to restructure government regulatory rules in order to create a balanced financial system that serves the needs of consumers and businesses. This influence is reinforced as Pluto is opposing the USA’s natal Venus in Cancer and challenging the USA’s Libra Midheaven (the Administration; USA’s global reputation). The Sun/Pluto can bring more mergers and acquisitions due to financial constraints. At the same time there could be legal challenges to mergers and bankruptcy proceedings. Look for the Sun opposite Pluto to expose more of the secrets of the shadow banking system. The Sun opposite Pluto will wield its greatest influence at the Federal Reserve.

Speaking of the Federal Reserve, the Fed will release its statement on monetary policy at 2:15 PM on Wednesday. The Fed statement could be more defensive of its extreme monetary easing, communicating that the economy is not ready for a withdrawal of its excess liquidity anytime soon.

The House Oversight and Reform Committee issued a second subpoena on the Fed for more documents related to the Fed’s role in ensuring Bank of America completed its acquisition of Merrill Lynch. At 10:00 AM on Thursday it will be Fed Chairman Bernanke’s turn to testify.

Take all those scattered thoughts and pieces of paper and structure them into a coherent plan on Friday as Mercury in Gemini challenges Saturn in Virgo.

The energies of Uranus in Pisces are more pronounced from Friday through July 6 as the planet turns retrograde July 1. Uranus tends to create volatility through sharp and unexpected swings that go higher or lower quicker than anyone anticipated. With Uranus in the house representing speculation and Neptune the planetary ruler of this house in the Cancer New Moon chart, the market will probably make large moves in both directions over the next month as it shifts from periods of euphoria to panic. And it’s those Cancer themes discussed above that will most likely be the source of the wildest market moves.

Monday, June 22, 2009
Positive trend bias.

Tuesday, June 23, 2009
Negative trend bias.

Wednesday, June 24, 2009
Indices negative but interspersed with choppy/mixed conditions. Could see improvement approaching the final hour.

Thursday, June 25, 2009
Negative conditions improve to choppy/mixed to moderately up in afternoon.

Friday, June 26, 2009
Anecdotal reports of economic contraction keeps market lower.

*The cardinal signs are Aries (spring), Cancer (summer), Libra (fall), and Capricorn (winter).
**The first of two New Moons in Cancer. (The second is a Solar Eclipse on July 21.)

No disclosures.

USA: July 4, 1776 5:10 PM Philadelphia, PA

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Obama’s Regulatory Reform Removes the Punchbowl from the Fed

Published by WallStreetWeather.net

Capricorn and its planetary ruler Saturn represent government, structures, and rules and regulations. With transformative Pluto in Capricorn from 2008 to 2024, all types of structures get reformed, as well as the government agencies in charge of overseeing them.

The Sun represents leaders, and with the Sun opposing Pluto, President Obama yesterday released the Administration’s plan for “Financial Regulatory Reform A New Foundation: Rebuilding Financial Supervision and Regulation.”

Planetary oppositions represent opposing forces, and the Sun opposite Pluto describes the turf battles that took place behind the scenes between the executive branch, leaders of the financial regulatory agencies, members of Congress, and industry executives and lobbyists to preserve their power and influence. Although the Office of Thrift Supervision and the Office of the Comptroller of the Currency will be combined to become the National Bank Supervisor within the Treasury, the Administration failed to combine the Commodity Futures Trading Commission (CFTC) and the SEC due to objections by the House and Senate Agriculture Committees.

The Sun/Pluto opposition is transiting the Federal Reserve’s natal Sun in Capricorn opposite its Pluto in Cancer, reinforcing the need to shed light on the Fed’s secretive dealings and restructure its identity. Planetary oppositions involve a give and take interaction between the two energies in order to achieve equilibrium. The reform proposal would increase the Fed’s powers as the Fed would become the Systemic Risk Regulator in charge of all financial institutions that could pose a systemic risk to the financial system, including hedge funds and insurance companies. General Electric (GE) through its GE Capital unit is an example of a company that would come under the Fed’s supervision if Congress approves the Administration’s plan.

At the same time the Fed will have to give up some powers. The Fed Chairman will be a member* of a newly created Financial Services Oversight Council chaired by the Treasury Secretary. The council would decide what firms pose a systemic risk, identify regulatory gaps, and recommend firms to be classified as financial holding companies (FHC) that would fall under the Fed’s supervision. The Fed would not be able to make loans under Section 13.3 unless approved in writing by the Treasury Secretary. Several members of Congress would like to have the Fed’s regional bank presidents be confirmed by Congress rather than be appointed to their position by the banks they regulate.

As the planetary ruler of debt, Pluto rules mortgages and all types of loans. Pluto also rules anything occult (hidden). The good news for consumers is that the Fed would have to relinquish its regulation of consumer products over to the Consumer Financial Protection Agency (CFPA), a newly created independent agency to oversee credit, mortgage, and savings products, that would provide greater transparency so that documentation for mortgages, credit cards, and other financial products are easier to understand. The Justice Department would closely cooperate with the agency to ensure the CFPA’s rules are being enforced, and the CFPA would create an outside advisory panel that would coordinate its efforts with other regulators to ensure that no financial product goes unregulated.

These proposed changes correlate to a post I wrote in September 2007 on “The Fed’s Future” where I stated that the Fed’s purpose and scope would be transformed during this time. I also predicted that Ben Bernanke would not be reappointed Chairman and might even resign before his term expires on January 31. The Administration is calling for a “comprehensive review” of the Fed’s organization and structure, and if Bernanke is truly against the Administration’s plan to turn consumer finance over to a new agency, it’s hard to imagine President Obama will reappoint him for another term.

The Fed’s natal Sun/Pluto opposition also describes that the central bank is too beholden to the financial institutions it regulates. The Fed’s Capricorn Sun reflects that the Chairman for the most part is too enamored with the power and prestige that come with the job and Wall Street’s chief executives seek to use this to their advantage. Needless to say financial institutions are against taking away the Fed’s power to regulate consumer financial products. Or as one Wall Street executive told the Financial Times: “If the industry had a choice of an overall regulator, it would have chosen the Fed.”

The Fed’s chart shows that its actions have hurt rather than helped consumers. The Fed’s Pluto is in Cancer, a sign ruled by the Moon. The Moon represents consumers, and with the Fed’s natal Moon in Pluto-ruled Scorpio in the area of the chart representing financial speculation, the Fed has catered to the “shadow” banking system at the expense of consumers. To support “financial innovation,” the Fed chose to ignore the deceptive practices in consumer financial products from financial advisors through non-conventional mortgage products that led to the housing and credit bubbles. And the Fed refused to raise margin requirements which led to the dot com bubble. If the CFPA had existed, retail investors would not have been allowed to purchase such esoteric products as auction rate securities.

Just like his predecessor Alan Greenspan, Bernanke has made no attempt to balance the Fed’s Sun/Pluto opposition to strike a fair balance between the interests of financial institutions and consumers. In fact, both Bernanke and Greenspan tilted the scales in favor of financial innovation at the expense of consumers. Thus Bernanke’s hostility toward the creation of the CFPA is understandable but not very politically astute.

The level of suspicion over the Fed’s lack of transparency and secretive maneuvers is so high at this point that both parties are supporting Rep. Ron Paul’s bill (HR1207) and its Senate companion bill (S604) to audit** the Federal Reserve.

President Obama stated yesterday: “We seek to create a framework in which markets can function freely and fairly, without the fragility in which normal business cycles suddenly bring the risk of financial collapse; we want a system that works for businesses and consumers.”

Clearly creating the Consumer Financial Protection Agency is the key to mitigating the boom/bust cycle President Obama describes as it takes away the punchbowl from the Fed.

Related Posts: “Bernanke and the Fed’s Bogus Transparency”, “Bernanke Behind Threat To Oust Ken Lewis”, “Bernanke’s Bubble Lab”

*Other members of the Council will be the Chairmen of the CFTC, FDIC and SEC, and the Directors of the FHFA and the plan’s proposed new agencies, the Consumer Financial Protection Agency and the National Bank Supervisor.

**Congress already passed legislation authorizing the GAO to audit the Fed on AIG.

No disclosures.

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WallStreetWeather.net Forecast For Week Of June 15, 2009

Summary Of Last Week’s Influences:
Financial markets have a tendency to overreact to news when Mercury interacts with Jupiter. On Wednesday the market’s early bullishness was reversed after crude oil inventories were lower than expected. And the downward acceleration gained momentum after the 1:00 PM 10 year auction grew a “long tail” that forced the government to pay buyers a higher than expected interest rate.

Wednesday’s 10 year yield just under 4% propelled the interest rate on the 30 year fixed mortgage to 5.79% from just under 5% two weeks ago, injecting fear in the market that higher gas prices and mortgage rates will dampen any signs of economic recovery.

That sentiment reversed on Thursday as the market took a “glass half full” attitude. Or what I would equate to a lake coated with thin ice. It might look solid, but once you step on it you quickly realize it is not as solid as it initially appeared to be. Initial jobless claims were lower than expected, but continuing unemployment claims set their 19th straight record (6.816M). May Retail Sales were up 0.5%, but the increase was mostly attributed to higher gas prices.

These extreme swings in sentiment where the market views higher Treasury yields and rising commodity prices as a sign that economic conditions are improving only to be viewed a short time later as stoking inflation from too much government debt eroding the economy, can be attributed to Jupiter and Neptune conjoining in Aquarius, the sign of extremes.

Summary Of This Week’s Influences:
Jupiter’s influence will be particularly pronounced now through Wednesday as from Earth’s vantage point it appears to turn retrograde on Monday until October 13. Issues relating to ethics and trust, foreign matters, legal issues, higher education, philosophical and religious beliefs, sports, and publishing are highlighted now. The retrograde period is a good time to review and reconsider matters relating to these issues.

Speaking of publishing, Dow Jones (NWS), the publisher of Barron’s and The Wall Street Journal has two articles this weekend that articulate the influence of the Jupiter/Neptune conjunction on the markets.

Jupiter expands and Neptune inflates to form bubbles. Yesterday’s WSJ (“Stocks in the Black on Gusher of Cash”) calls the stock market’s rapid rebound since March and the rise in crude oil (Neptune) the “bailout bubble” as central bank liquidity and government stimulus spending has created a “global cash wave.” And when the bubble bursts, there will be an “ocean of liquidity” to mop up. Neptune rules the oceans, and Aquarius likes to make “waves” (which is what its symbol resembles). Aquarius and its planetary ruler Uranus relate to sharp and sudden market moves that go higher or lower than expected. And Uranus in Neptune-ruled Pisces reinforces the rollercoaster ride of bubbles that dissolve into thin air.

To quote the Barron’s cover story, markets move “Too Far, Too Fast” in “a pandemic of bullishness that is sweeping stock markets here and elsewhere around the world.” (Neptune rules contagions and Jupiter represents the global marketplace.) Jupiter’s optimism combined with Neptune’s hope provides the rocket fuel for forward-looking Aquarius to propel the market rapidly upward. As Barron’s panelist Scott Black observed, “investors are chasing any glimmer of hope”, fearing they will be left behind if they wait for fundamentals to support their belief.

Jupiter and Neptune first conjoined on May 27, two days before Neptune turned retrograde. The stock market was the focus at that time and leading up to the planetary pair’s next exact conjunction on July 10. Then the focus shifts to foreign matters and the Jupiter themes outlined above. Enthusiasm wanes as these energies begin to separate, and other planetary influences gain prominence. Barron’s panelist Felix Zulauf believes that this “first rally is just about done. The market might climb into July, but it will correct in the fall, with stocks retracing maybe 50% of the recent advance.”

Zulauf’s comments that “the financials are done, perhaps for a couple of years,” echoes the current and recent cycles of Mercury, Venus, and Mars in the banking sign Taurus challenging the Jupiter/Neptune alignment. Mars in Taurus challenging Jupiter/Neptune on July 6 is likely to spark a selloff on credit concerns and inflationary fears.

I will be writing more about these upcoming planetary cycles, but must give them a brief mention since Zulauf (whether consciously or unconsciously) neatly sums them up. Saturn will enter Libra the sign of balance on October 29. Pluto rules debt and Capricorn is ruled by Saturn, the planetary energy of structure and economic contraction. Capricorn rules government. Saturn in Libra will first exactly challenge Pluto in Capricorn (2008-2024) on November 15. Here’s how Zulauf sums that up:

“A long-term imbalance remains between overspending in the U.S., and over-producing in China. The financial crisis was the start of a move to greater balance that implies lower growth for both sides. The deleveraging process…has only started. It will run for several years. We are shifting debt from the private sector to the government sector which will lever up. These structural forces will continue to be a major restrictive factor in the world economy.”

Looking ahead, Zulauf says: “The real danger comes from mid-2010 through 2011. This won’t be a conventional business-cycle expansion, but a bumpy road.” In July 2010, Jupiter and Uranus in Aries, Saturn in Libra, and Pluto in Capricorn will form a cross shaped pattern. In these action-oriented (cardinal) signs, many dynamic changes will occur. This is a crisis point, but a crisis is really a dangerous (and exciting!) opportunity that will bring rapid scientific and technological advancements (unconventional Uranus in pioneering Aries). Just as a mother soon forgets the pain of childbirth upon holding and gazing into the face of the fruits of her labor, the more we are willing to clean up the mess now and go through the labor pains, letting go of the old structures that no longer serve us, the better we’ll be prepared to enage in all the new and exciting developments ahead.

But first we’ve got to get back to this week! Jupiter stationary through Wednesday is likely to bring bigger market moves at least intraday. On Monday the Last Quarter Moon in Pisces will reinforce the Jupiter/Neptune alignment as Pisces is ruled by both of these planets. Jupiter can make big moves in either direction as hype can turn to hysteria, but the largest planet in our solar system really prefers to be jovial.

When Jupiter went retrograde last year, former St. Louis Fed president William Poole said: “If the Fed is unwilling to reverse its excessively expansionary policy in the coming quarters, which is my take on likely policy, the Fed almost guarantees higher inflation.” Tuesday’s PPI and Wednesday’s CPI is likely to show greater inflationary pressures.

The Sun rules speculation; it will be interesting if we have a “wild Wednesday” as the Sun in dualistic Gemini will harmonize with Jupiter/Neptune while challenging Uranus in Pisces. The former are a more bullish influence, but Uranus is the wild card that likes to shake things up as its motto is “expect the unexpected.”

Monday, June 15, 2009
Positive trend bias.

Tuesday, June 16, 2009
Negative to choppy/mixed; improving conditions as day progresses.

Wednesday, June 17, 2009
Up early, then could hit some turbulence before resurging going into the close.

Thursday, June 18, 2009
Mildly up early, then choppy/mixed to negative.

Friday, June 19, 2009 (Quadruple Options Expiration)
Indices open mixed to moderately up before spending most of the day in negative territory.

No disclosures.

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Lewis and Bernanke Both Played on Fears and Threats in BofA/Merrill Deal

Published by WallStreetWeather.net

“In short, the Treasury Department had provided a $20 billion dowry for a shotgun wedding. But the question may be, ‘Who was holding the shotgun?’” – House Oversight and Reform Committee Chairman Edolphus Towns

On June 11 the House Oversight and Reform Committee questioned Bank of America (BAC) CEO Ken Lewis to ascertain whether he was pressured by Federal Reserve Chairman Bernanke and former Treasury Secretary Paulson to consummate the bank’s marriage with Merrill Lynch, or whether Lewis’ threat to back out of the deal was actually a strategy to get government assistance to complete the merger.

Chairman Towns said at the conclusion of the hearing the Committee needs to hear all sides of the story to put the pieces together and will call on Bernanke and Paulson to testify at an upcoming hearing. It will be interesting to see if they show up voluntarily or whether the Committee will have to issue subpoenas, which was how the Committee got the Fed to turn over the documents it requested for this hearing.

The new twist that Ken Lewis might have been manipulating Bernanke and Paulson was primarily pursued by Rep. Dennis Kucinich who remarked it was “quite possible that BofA put a gun to the head of the Fed by threatening to invoke a MAC” (material adverse change) clause in the merger agreement due to Merrill’s escalating losses.

A Federal Reserve email from Richmond FRB president Jeffrey Lacker (page 9) states that Bernanke thought the MAC threat “is irrelevant because its not credible.” In another email, (page 1) Fed staffers questioned BofA’s “due diligence process”, believing Lewis’ claim to be “somewhat suspect” since even though Merrill’s fourth quarter losses began to accelerate in mid November, those losses had been “observably underway over the entire quarter.”

Lewis told the Committee it was the sudden acceleration of Merrill’s losses that prompted him to contact Bernanke to tell him he was “strongly considering” invoking the MAC. The chart for the December 17, 2008 6:00 PM meeting with Bernanke and Paulson shows both sides would quickly reach agreement that the merger needed to happen since the planetary rulers representing Lewis (the Moon) and the government (Saturn) would exactly conjoin at 5:58 PM the following day.

The Moon conjoining Saturn in Mercury-ruled Virgo in the area of the chart representing contracts shows that both sides had anxieties about how they would steer this through. The Moon harmonizing with Mercury in Saturn-Ruled Capricorn indicates that Lewis was relying on the government to help him with his predicament. It’s a predicament Lewis would not have faced if during the panic of that Full Moon weekend when Lehman collapsed, he could have been patient and waited for Merrill to unravel and come to him at a much lower price. That’s how Barclays (BCS) ended up with the choicest morsels of the Lehman carcass.

Both sides have claimed they acted for the good of the country. The sign Cancer on the chart’s Ascendant* indicates the accuracy of their assertion since it exactly conjoins the USA’s Sun (nation’s identity). The Ascendant conjoining the USA Sun in Cancer also appropriately describes Bank of America (the biggest U.S. bank by assets), symbolized by its American flag logo.

The Sun conjoining Pluto represents leaders in very powerful positions. Pluto represents secrets, hidden agendas, and power plays. Scorpio ruling the area of the chart representing shareholders reflects that BofA shareholders would be kept in the dark about what was going on. Lewis said at the hearing that it is the job of BofA’s securities lawyers to tell him when he needs to publicly disclose information to shareholders.

Saturn represents government. It also represents the pressure the majority of Committee members felt the government was exerting on BofA to complete the Merrill acquisition. In a December 20 email (page 9), Jeffrey Lacker details a conversation he had with Bernanke who told him he “intends to make it clear that if they play that card (invoke the MAC) and then need assistance, management is gone.” Lacker writes that he forgot to tell Bernanke that “Ken Lewis is near retirement.” An email from Fed Governor Kevin Warsh (page 16) to Bernanke states that Warsh “reminded” BofA CFO Joe Price “that they are the ones who would look equally bad in eyes of market and regulators if they chose to terminate transaction.” Lewis kept reiterating that he didn’t view these comments as a threat but rather took the Fed’s serious tone to mean the government was very concerned about injecting additional systemic risk into a fragile economic environment.

Rep. Darrell Issa asked Lewis if Bernanke and Paulson pressured him to go through with the deal using tactics that a car salesman would employ. Rep. Jeff Flake questioned whether Lewis might be suffering from Stockholm syndrome as Lewis, ever mindful that BofA must keep its financial regulators happy, attempted to politely sidestep the issue. Lewis said that Bernanke “never said we should not disclose anything that was disclosable but did express interest in not calling a MAC several times.”

By December 21 the Fed had put together a “Talking Points” memo (page 11) outlining why the deal had to go through, and a Fed email the following day (page 4) confirming Ken Lewis agreed to “drop the MAC and work with the government to develop whatever support package might be needed for earnings announcement dates around January 20.”

As Rep. Kucinich remarked in his opening statement: “Due to the secretive and unaccountable conduct of the Fed throughout its interventions addressing the current financial crisis, many questions about the Bank of America-Merrill Lynch deal and bailout have, until today, remained unanswered.”

Kucinich aptly describes the Fed’s Sun in Capricorn opposing Pluto in Cancer. The June 21 Summer Solstice and the Cancer New Moon the following day conjoin the Fed’s natal Pluto and oppose the Fed’s Capricorn Sun. And during this time the Sun in Cancer will oppose Pluto in Capricorn, reinforcing this planetary pattern in the Fed’s chart.

The Fed will be forced to be far more transparent about its financial arrangements. Pluto in Capricorn conjoining the Fed’s Sun will transform the Fed’s identity and purpose. The Sun opposite Pluto reflects disagreements between Chairman Bernanke (Sun), the Fed governors and regional bank presidents, as well as members of Congress is likely to become more intense over time. The very foundation of the nation’s central bank must be rebuilt as the financial system has been severely weakened by the Fed taking the nation from one bubble to another and then deploying ad hoc solutions to handle the financial fallout.

*The Ascendant represents the zodiac sign rising on the eastern horizon at the time of birth.

No disclosures.

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