WallStreetWeather.net Forecast For Week Of October 25, 2009
Summary Of Last Week’s Influences:
Is it 1999 or 2009? On Friday shares of Amazon.com (AMZN) jumped $25.04 to a record closing high of $118.49, surpassing its 1999 high during the dot.com craze. Shares of Apple (AAPL) also hit a new high last week.
This is the stock market’s way of rewarding the few companies that beat earnings expectations through strong quarterly profits and growth projections. Beyond that, the stocks reflect the 36.6% rise of the NASDAQ this year attributed to Jupiter (expansion; optimism) in Aquarius (tech) forming mostly favorable aspects to the NASDAQ chart. Amazon went public went in 1997, the last time Jupiter was in Aquarius, and is experiencing its first Jupiter return now.
Jupiter combining with Neptune for most of the year reflects the decoupling of financial markets from the rest of the economy. Neptune rules oil which closed above $80 a barrel this week despite the fact that demand is weak and supplies are plentiful. Chalk it up to asset inflation supported by ultra loose monetary policy.
While most of the media was focused on the pay czar’s compensation rulings, along with Federal Reserve Chairman Bernanke’s announcement that the Fed will “examine” pay practices at the “28 largest and most complex banks,” there are larger issues that need to be addressed that would in turn take care of the plutocrats’ payouts.
Obama Administration pay czar Kenneth Feinberg won’t need to move to Pluto since he’s kept something far more important to these companies in place: the channels connecting the plutocrats on Wall Street with the plutocrats on K Street and the plutocrats in Congress who are eager to receive their largesse in private while publicly chastising their behavior in front of Main Street.
With the newfound euphoria on Wall Street, banks have returned to heavy lobbying and political donations. The Wall Street Journal reports Bank of America (BAC) donated $30,500 to Republicans and $13,500 to Democrats in September. The Federal Reserve saved Goldman Sachs (GS) and Morgan Stanley (MS) from last fall’s carnage on Wall St. by allowing them to become “banks.” Morgan Stanley’s PAC doled out $110,000 in political donations in October, and Goldman’s PAC gave $37,500 mostly to Democrats, in September. Currently the only companies prohibited from lobbying the government are Fannie Mae (FNM) and Freddie Mac (FRE).
Even if Feinberg prohibited the seven companies from lobbying and donating to members of Congress, why should the restriction end there? Goldman, JPMorgan Chase (JPM) and other companies that have paid back the TARP are still receiving the biggest benefit of all as they have been deemed too big to fail by the government. That brings these companies more business in an environment with fewer competitors and more favorable borrowing terms. If the Administration is going to set pay rules on the seven companies that have received "exceptional assistance," other companies continuing to benefit from government assistance should be forced to abide by them as well. And that should extend to the health insurance companies who are allowed to reject applicants and rescind policies while at the same time collecting government subsidies for Medicare Advantage.
Part of the Obama Administration’s financial regulatory reform overhaul would make the Federal Reserve the Chief Systemic Risk regulator over financial institutions deemed systemically important to the financial system. In what might be considered writing your own job description, on Tuesday the Fed appointed Patrick Parkinson to head bank supervision and regulation at the Fed after he did a brief stint at the Treasury working on the very plan that would give this new power to the Fed/himself! (There is a chance that the Fed will not be given these powers as it must be approved by Congress.)
On Thursday the House Financial Services Committee voted 39-29 to create the Consumer Financial Protection Agency. Two Democrats – Walt Minnick of Idaho and Travis Childers of Mississippi had the nerve to vote against it; Mike Castle of Delaware was the lone Republican voting for it. Banks and other lenders are heavily lobbying to stop this, trying to convince consumers that their “freedom” to make financial choices will be taken away if the new agency is created. Oh yes, let’s choose to have credit cards with a 30% interest rate, adjustable rate mortgages, and “pick-a-pay” negative amortization mortgages so we can have more people drowning in debt! Already the House Financial Services Committee bowed to lobbyists by voting to exempt automobile dealers; hopefully this will be changed in the final bill.
Even though September existing home sales were better than expected Friday, the Sun moving into Scorpio (taxes) reflected that the market attributed the increase to the $8,000 homebuyer tax credit which is set to expire November 30 unless Congress votes to extend it.
How hypocritical that the most ardent supporters of extending and expanding the credit to $15,000 for all homebuyers earning up to $300,000 year for married couples, are the “free marketers” who are most vehemently against healthcare reform over concerns about increasing the deficit! According to congressional estimates, extending the cost of the current homebuyer tax credit would cost about $1 billion a month. On Wednesday the House and Senate judiciary voted to overturn a 1945 law exempting health insurance companies from federal antitrust violations that every other industry in America has to abide by.
The IRS and the Justice Department are investigating more than 100 suspicious schemes involving the current homebuyer tax credit. The Treasury Department states at least 19,000 filers who didn’t even buy a home claimed $139 million in tax credits that were reimbursed by the government. And over 500 people under 18, including a 4 year old child have claimed the credit by parents who did not qualify!
Summary Of This Week’s Influences:
A major societal shift is underway as Saturn enters Libra early Thursday afternoon, providing a six month preview of the structural changes underway that will transform the financial system.
To give you a sense of what this means, Pluto entered Capricorn on January 25, 2008 and provided a six month preview of what was to come once Pluto returned to Capricorn November 26, 2008 until 2024. From a $7+ billion loss from a “rogue trader,” the UK government takeover of Northern Rock, to the collapse of Bear Stearns, financial markets were unraveling from the excess risks taken during the years of Pluto in the global sign of Sagittarius (1995-2008). These years marked the apex of financial “innovation” that was outsourced around the world. Pluto rules debt, and suddenly all that debt went from something you could make money on to a mountain of toxic trash when Pluto entered Capricorn.
Sagittarius is ruled by Jupiter which explains not only why everything physically expanded (SUVs, McMansions, people), along with the overly optimistic, instant gratification attitude of borrow and spend now and we’ll deal with any consequences at some future date.
Jupiter and Sagittarius describe our philosophical and religious outlook. When the Bush Administration’s religion of moral hazard got freaked out after Lehman Brothers collapsed, Hank Paulson, Timothy Geithner, and Mr. Sagittarius Ben Bernanke, got inspired from across the pond and in true this is the last roundup of Pluto in Sagittarius fashion decided to make the banks that they were afraid were too big to fail even bigger!
Now after JPMorgan Chase has swallowed Bear Stearns and Washington Mutual and Bank of America took on Countrywide Financial and Merrill Lynch, it would be an extremely difficult process to break them apart into pieces. This is what Mervyn King, the governor of the Bank of England would like to do with UK banks if the Financial Services Authority approved it. Last week former Federal Reserve Chairman Paul Volcker, Chairman of the President’s Economic Recovery Advisory Board, advocated the separation of commercial and investment banking that existed prior to the 1999 repeal of the Glass-Steagall Act.
Saturn in Libra is forming a challenging alignment to Pluto (exact November 15). Saturn and Capricorn rule government, which has pulled out all the stops for these banks to profit through investment banking. But the challenging alignment of Saturn and Pluto means the limo rides don’t come free unless you get permission from the pay czar. The banks are super big, but they will be also be super regulated to the point where they eventually are run like utilities.
Virgo is the bookkeeper, and Saturn will re-enter Virgo just in time for banks to report first quarter 2010 earnings when FASB requires that banks bring back certain off balance sheet securitizations back onto their books.
It’s not just banks that will be feeling the pressure. As soon as Saturn enters Libra it will challenge the Federal Reserve’s natal Pluto in Cancer. Cancer is ruled by the Moon (consumers). The government will create the Consumer Financial Protection Agency that will remove the Fed’s power to control consumer finance.
Saturn challenging Pluto also represents the gradual contraction of the Fed’s liquidity and lending programs. Friday is the deadline for the Fed to complete its $300 billion purchase of Treasury securities, during a week that will see a record $123 billion of U.S. debt issuance.
Mercury enters Scorpio Wednesday morning until November 15. The combination of Mercury entering Scorpio, Saturn entering Libra, and Saturn challenging the Fed’s Pluto, could at least bring a quick shift in currency and bond price fluctuations. Scorpio is ruled by Pluto. With Mercury making a favorable aspect to Pluto Wednesday, this is a good day for doing research, especially with the Moon in Pisces. Scorpio/Pluto rules secrets, debt, taxes, insurance, and nuclear issues – all themes that will be prominently featured in the news during the next few weeks.
The indices reached new 2009 intraday highs last Wednesday around the time Mercury in Libra harmonized with Jupiter in Aquarius. Venus in Libra will harmonize with Jupiter midweek, attempting to make another new high to tone down the much more cautious influence of Saturn entering Libra and challenging Pluto.
The pleasant vibes of Venus and Jupiter quickly give way to the Sun in Scorpio challenging Mars in Leo late Wednesday/Thursday which could spark a selloff. There could be more news about insider trading and/or new revelations about hedge or pension fund fraud.
Financial markets will begin to make larger and more volatile moves this week.
Monday, October 26, 2009
Positive trend bias; likely strongest early in session.
Tuesday, October 27, 2009
Negative, but could improve in mid-afternoon.
Wednesday, October 28, 2009
Big moves in either or both directions; positive bias.
Thursday, October 29, 2009
Early enthusiasm wanes and sparks a sell off.
Friday, October 30, 2009
Big moves in either or both directions; negative bias.
Posted 10/25/2009 10:04:00 PM