WallStreetWeather.net Forecast For Week Of September 14, 2009
Summary Of Last Week’s Influences:
Mercury represents trading one currency for another. Since Mercury turned retrograde, the value of the U.S. dollar to the world’s major currencies has declined to new lows for the year. On Friday the dollar index (DXY) hit a 52 week low, and made a new 2009 low against the euro. As Mercury stationed retrograde, the Chinese government expanded its plans to internationalize the renminbi, and a report by the U.N. Conference on Trade and Development said the dollar’s role as the world’s reserve currency should be reduced.
The stock market’s continued upward trajectory also weighed on the dollar, as the Fed and other government officials continue to reiterate fiscal stimulus won’t be reversed anytime soon. On the six month anniversary of the indices hitting multiyear lows on March 9, the S&P 500 has risen over 50%. (1933 was the only time in a six month period the S&P has exceeded that rapid gain.) One day before the 9/11 attacks, the Dow closed at 9,605.51; on Friday the Dow closed at 9.605.41.
Mercury turning retrograde Monday brought the return of news about takeover speculation after Kraft’s (KFT) attempt to buy Cadbury for $16.7B was rejected by the confectionary company. Pluto rules M&A activities, and its energies were also pronounced as Pluto turned direct September 11. Any company that makes a never before fresh offer to acquire another company during Mercury retrograde will probably end up regretting it, but Wall Street banks only care about rejuvenating the dealmaking to collect those fat fees.
In last week’s Forecast I wrote about gold’s rapid rise since Venus entered Leo (August 26-September 20). As the mythological lord of the underworld, Pluto rules the wealth extracted from under the Earth.* When planets appear from Earth’s vantage point to be stationary, their energies are more pronounced. Pluto was stationary all week, and (Sep.) gold reached a new record close of $1,004.90 an ounce Friday when Pluto turned direct.
Dollar weakness is increasing the price of gold as investors use gold as a hedge against overly accommodative monetary policies. Another reason for gold’s rise at this time is that gold is experiencing its Saturn return from its all time record high of $850.00 on January 21, 1980. (On October 2, Saturn in Virgo will be exactly where it was when gold reached its record high.) Back in 1980 gold was being bought as a hedge against record high inflation, as Saturn (fear) was challenging Neptune (inflation) in fiery Sagittarius. Neptune in fire signs tends to elevate inflation, and in Jupiter-ruled Sagittarius, inflation rapidly expands.
While I foresee inflation coming sooner than most of Wall Street expects, the above explanation describes why I do not foresee inflation rising to match the levels of the 1970s-early 1980s. And it is for this reason that I do not believe gold will break its 1980 record. Because in inflation-adjusted terms, gold’s real record high in 1980 was $2,284.99. Gold bugs tout that gold has never gone down to zero, but it’s no inflation hedge either. (And the potential for loss is only slightly above Lehman Brothers.)
Of course there are those investors who feel better owning gold during times of instability. Pluto turning direct together with Mercury retrograde reinforced the old tensions between the U.S. and Russia, Iran, and North Korea. Pluto rules nuclear issues, and Russia is not cooperating with the West on imposing further sanctions against Iran who like North Korea, has made it clear it will continue to enrich uranium.
Pluto represents covert activities, and yesterday the Israeli Intelligence Affairs minister admitted Prime Minister Netanyahu was not “on tour” at an Israeli security installation as had been reported, but instead made a secret visit to Moscow on Monday. The Russian newspaper Kommersant speculated the trip’s purpose could relate to the possibility of Israel planning to attack Iran. The Middle East does appear to have the potential to be a major hot spot for the three months beginning with the September 22 Autumnal Equinox.
Related Pluto Post: “Fed Pushes Banks To Buy Ginnie Maes To Create Illusion Of Healthier Balance Sheets”
Summary Of This Week’s Influences:
We have arrived at the one year anniversary of the week that saw the collapse of Lehman Brothers, the marriage of Merrill Lynch to Bank of America, the 79.9% government solution for AIG, and the panic that spread to the doorsteps of Morgan Stanley and Goldman Sachs.
President Obama and Fed Chairman Bernanke are scheduled to give speeches commenting on the first anniversary of Lehman’s collapse. Bernanke will probably use the opportunity to repeat how he was impotent to help because Lehman’s problems were beyond the powers of the Fed, despite Section 13.3. With Mercury retrograde, Bernanke will likely also repeat his claim he saved the world from “Depression 2.0.” But other than the fact that there is less competition on Wall Street, what has fundamentally changed? The Bush Administration’s policy of demanding moral hazard has created banks that are even bigger than those previously deemed too big to fail. Government welfare programs have helped to put many of the banks on course for record profits and executive compensation this year while consumers are hit with fewer banking choices, higher fees and higher consumer interest rates despite the central bank’s monetary policy.
As Gretchen Morgenson points out in her column today, “awarding increased power to those who failed in their oversight duties flies in the face of all notions of accountability.” Except for Hank Paulson and Christopher Cox, all the major financial regulators are still running the show now (and Bernanke has been renominated). Or as Morgenson writes: “Imagine hiring Angelo R. Mozilo, the former chief of Countrywide Financial, to run a global financial institution.” Federal Reserve officials had taken up residence at Lehman’s headquarters since Bear Stearns collapsed in March, but they did nothing and allowed Dick Fuld and the other top executives to project a positive scenario to shareholders up to the very end.
Saturn represents life’s lessons, and during Saturn in Virgo the lesson is about accountability. Tuesday marks the third time that Saturn opposes Uranus in Pisces. Uranus represents surprises and shocks to the system that serve as a wakeup call to change what has become inefficient (Saturn in Virgo).
The first Saturn/Uranus opposition occurred on Election Day and was quite literal as Saturn represents the establishment and elderly persons, and Uranus represents “change” and the younger generation. Oppositions are like a seesaw that tilts too far to one direction; what’s needed is to balance the positive energies of both planets. The February 5 opposition was skewed towards Saturn’s end as the market feared what was lurking on banks’ books would not pass the stress test, forcing the government to nationalize the banks. Within one month of these oppositions, the stock market hit new lows but then Uranus, aided by giant Jupiter and bubble blowing Neptune in Aquarius (the sign ruled by Uranus), tilted the seesaw in the other extreme.
The indices reached new 2009 closing highs Thursday and intraday highs Friday. Although the stock market has remained turbulent free so far, it is only a matter of time (Saturn). The easy money riding up on future projections (Uranus) has been made. Saturn represents fundamentals, and Saturn in Virgo can get pretty nitpicky. Without fundamental support, the stock market has limits (imposed by Saturn’s infamous rings) as to how much higher it can go.
Past performance (Saturn) does not indicate future projections (Uranus), and Mercury retrograde could alter the opposition’s previous patterns of market behavior. However, as Saturn approaches a challenging alignment to Pluto (exact November 15), more previously undisclosed information will likely surface regarding the actions taken by government officials during the financial crisis. And Congress will likely pass some type of financial regulatory reform.
October 15 marks the midpoint of the Saturn/Uranus opposition and Saturn challenging Pluto. Mars (action) reaches the degree of the July 21 Solar Eclipse that day. The eclipse conjoined the Federal Reserve’s natal Neptune and opposed the USA’s natal Pluto. As Pluto represents the extremes of massive wealth and massive debt and bankruptcy, some more financial lessons could be in store as part of the planetary curriculum.
Unlike the prior two Saturn/Uranus oppositions, the Sun (Thursday) and Friday’s Virgo New Moon intensify these energies. The Virgo New Moon raises new questions and brings evaluations of old issues. Virgo is ruled by Mercury which retrogrades back into Virgo late Thursday until October 9. (Mercury was previously in Virgo August 2-25). Prior to Mercury’s shift Thursday, Mercury in Libra will once again challenge Pluto (previous time was August 26). Secret information could be revealed, potential for currency and other types of market manipulation, and potential geopolitical sabre-rattling.
To top things off this week, Venus (money/banks) in Leo (stock market) will oppose Neptune (euphoria/panic) in Uranus-ruled Aquarius (unexpectedly sharp and sudden moves). Adding to the potential volatility and choppy trading will be Friday’s quadruple options expiration that can create added volatility a couple days beforehand.
Monday, September 14, 2009
Tuesday, September 15, 2009
The stock market closed sharply up on the prior two oppositions of Saturn and Uranus (11/4/08 and 2/5/09), but today could find the indices choppy/mixed, swinging in both directions. If the market turns out to be bullishly up as in the past, it could likely start to lose momentum or even reverse into the close.
Wednesday, September 16, 2009
Thursday, September 17, 2009
Up early, then becomes choppy/mixed to negative.
Friday, September 18, 2009
Choppy/mixed to positive trend bias.
*However, oil is more closely related to Neptune, the ruler of chemicals and liquids that form bubbles.
Posted 9/13/2009 06:22:00 PM