The Fed’s Trick or Treat

It’s a bit of a cosmic joke that the next meeting of the FOMC occurs on Halloween. Until the September employment report, Fed Funds Futures favored the Fed delivering treats for the Street. And isn’t Halloween all about dressing up and donning a mask to assume the role of someone or something else? Yes, the Street is looking for Chairman Bernanke to once again deliver lower rates to get all that bad debt to disappear.

Halloween occurs when the Sun is in Scorpio, the sign of death, transformation, and rebirth. It is the night when the veil between those of us here on earth and those souls who no longer inhabit a physical form is said to be thinnest.

So it is most appropriate that Neptune, the planet of masks/illusions, deception/scandals, interest rates, and chemicals (including oil) is stationary turning direct*. This means that Neptune’s energies are exceptionally strong from October 28 to November 4. At the same time, Mercury (communication) is also stationary and about to turn direct the next day.

Looking back at recent Neptune stations shows a correlation with interest rates and the Fed. (SR= retrograde; SD = direct)

  • SR May 19, 2005 = Greenspan says house price inflation is starting to look excessive. (“Lots of local bubbles.”) Markets mixed to moderately lower.
  • SD Oct 26, 2005 = Markets down on concerns about inflation and interest rates.
  • SR May 22, 2006 = Markets worldwide down (DOW -214) on inflation concerns.
  • SD Oct 29, 2006 = Lacker in speech says inflation too high. Oil drops over $2.00. Markets moderately mixed to slightly positive.
  • SR May 25, 2007 = Markets up on merger news; thinks Fed will lower rates.

When I predicted in a Weekly Forecast entry for June 28 that the Fed would raise rates at the December 11 meeting, I was contemplating at the time whether the Fed would raise at the Halloween meeting as there are many inflationary indicators then. However, aspects to the Fed’s chart show a need to “please” the market, meaning there would be a warning of a future hike if inflation isn’t tamed. I think this stance may still transpire.

“,…the risks to inflation from this action seemed acceptable, especially as the Committee was prepared to reverse the policy easing if inflation pressures proved stronger than expected.” – Ben Bernanke addressing The Economic Club of New York City 10/15/07,
outlining the reasons the Fed lowered rates at their 9/18/07 meeting

* Planets do not really move backwards, but appear to from our vantage point here on Earth.

RELATED POSTS in the Predictions section:
Rate Hikes vs. Rate Cuts (7/30/07)
Looking Beneath the Surface: Mercury in Scorpio (10/4/07)

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