WallStreetWeather.net Forecast For Week Of November 22, 2009
“I don’t know what’s going on in the market right now because it makes no sense to me. There’s no root in fundamentals.” – Meredith Whitney
Summary Of Last Week’s Influences:
The indices exhibited their strongest performance early in the week before turning negative. The stock market had its best day on Monday after the Asia-Pacific summit (APEC) concluded its meeting over the weekend with a communiqué supporting continued economic stimulus measures, making no mention of the weakened U.S. dollar.
The market reacted with the same enthusiasm it exhibited the prior Monday after a meeting of the G20 finance ministers. Just like then, markets viewed APECs communiqué as a green light to sell U.S. dollars to finance purchases of stocks and riskier investments in commodities and emerging markets. (I’ve made a mental note to myself to study the communiqués from these financial gatherings as there’s no point in looking at the planetary influences for the Monday following these meetings unless there's been a change to previous communiqués.)
The dollar index made a 15 month low against a basket of major currencies Monday, ignoring Federal Reserve Chairman Ben Bernanke’s speech to the Economic Club of New York that monetary policy “will help ensure that the dollar is strong and a source of global financial stability.” Bernanke essentially told the markets to party on when he told the audience “it’s not obvious to me in any case that there’s any large misalignments currently in the U.S. financial system” between asset prices and their fundamental value.
Meredith Whitney’s remarks on CNBC Monday afternoon certainly described the planetary influences of the New Moon in Pluto-ruled Scorpio (debt/mortgages) challenging Neptune (credit; bubbles), and Saturn (fundamentals; government) square Pluto. Whitney was at the Bernanke luncheon and was disappointed that he did not discuss the Fed’s exit strategy. The Fed has committed to purchase up to $1.25 trillion of agency mortgage backed securities, wasting taxpayer dollars by purchasing them from the big investment banks (Goldman, JPMorgan, etc.) who buy the MBS directly from Fannie Mae (FNM) and Freddie Mac (FRE) and then sell them at a profit to the Fed when the Fed could purchase them directly. With mortgage rates having nowhere to go but up, the Fed as the primary purchaser of mortgage securities is going to be stuck with these low interest mortgages for a long time.
Reflecting the influence of Saturn square Pluto, Whitney said she “hasn’t been this bearish in a year” because stocks have “no fundamental rooting, particularly the consumer sector.” With $1.5 trillion in credit card lines pulled, credit contraction is higher than it was during the Great Depression. Combined with high unemployment, Whitney is as amazed as I am that the market is optimistic about retail stocks and holiday retail sales. This is just another example of the Fed's excess liquidity going into all stocks in all sectors that Bernanke won't acknowledge as being in an asset bubble detached from fundamentals.
The New Moon in Scorpio together with the strong Pluto influence brings issues that have been hidden or ignored back into our consciousness. The markets began to drop later in the week on the news that weekly mortgage purchase applications fell to a twelve year (one Jupiter cycle) low during the prior week. Saturn rules time and its square to Pluto reflects that 12.4% of mortgages are now 30+ days overdue making payments. The Mortgage Bankers Association also reported that more than 1 in 7 borrowers in the third quarter were behind on their mortgage payments, and one third of all foreclosures began in the third quarter were on properties where the borrowers have fixed rate prime loans. The government and the Fed don’t want to face the harsh reality that home prices will continue to fall regardless of their purchase programs and wasteful spending on programs such as the homebuyer tax credit. Employment will increase before home prices ever come anywhere close to what they were selling for during the boom. And part of the reason is that millions of properties are not desirable anymore and/or they are located in areas that no buyer would consider today because they were purchased for speculation.
As financial markets became more fearful (Saturn) about all this debt (Pluto), the dollar gained strength and stocks declined. On Thursday the three month Treasury bill maturing in January briefly turned negative for the first time since the financial crisis began, before closing at 0.01%. Despite these ridiculously insane interest rates, banks and institutional investors buy them up for window dressing.
Saturn square Pluto describes the financial reform legislation going through Congress that would impose tighter controls over the banks and also eliminate the Federal Reserve’s power to control consumer finance and even its ability to supervise banks. Saturn square Pluto reflects the imbalance that exists in the economy where the government and the Fed’s efforts to improve the economy have resulted in record profits for Wall St. and a bubble in stocks and commodities, while much of the nation experiences numerous economic challenges. These energies demand accountability and fairness from the leaders in charge of the financial system. Treasury Secretary Geithner was asked if he would resign during a hearing by the Joint Economic Committee Thursday, and with Saturn and Pluto affecting the Fed’s Sun (the Chairman), Bernanke’s confirmation by the Senate to a second term as Fed Chairman is no longer a sure thing.
Summary Of This Week’s Influences:
The Sun entered Sagittarius late Saturday evening until December 21. Sagittarius is ruled by Jupiter, the planetary energy of expansion and abundance. Thursdays are ruled by Jupiter and the fourth Thursday of November every year is when the U.S. celebrates Thanksgiving Day as a time for our Jupiter-ruled Sagittarius rising* nation to give thanks for all of our blessings beyond the bounty of a holiday dinner.
Money/values, debt, credit and socializing are the themes during this abbreviated holiday week as Venus in Scorpio squares Jupiter (Monday) and Neptune (Thursday), and makes a harmonious alignment to Uranus Wednesday. Market volume has been very light since the beginning of November, and this week volume should be exceptionally low.
Mercury challenging Jupiter on November 9 resulted in the biggest move in the indices that week, and Venus challenging Jupiter Monday is likely to do the same. The influence of Mercury and Venus is brief. Mercury challenging Neptune November 11 brought a shift in global currencies as the dollar slightly rebounded then, and Venus aspecting Neptune (exact Thursday) can have a similar influence on currencies.
With the Moon (emotional outlook) in Neptune-ruled** Pisces harmonizing with Venus, and Mercury in Sagittarius harmonizing with Mars in Leo Thursday, holiday gatherings could be particularly animated. With Venus challenging Neptune, guard against impulse purchases and addictive behaviors. Take extra precautions with financial information and scrutinize all financial transactions (especially credit card transactions), as this aspect can increase the potential for fraudulent activities.
From socializing and relaxing activities, the Moon shifts into Aries at 10:17 PM Thursday night until 6:33 PM Saturday. Now it’s a race to get the online deals and devise a military style strategy for Black Friday shopping. Be cautious driving and have a sense of humor, especially early Friday morning as hardcore shoppers could be doing the Daytona 500 to reach the door busters. People tend to be more competitive and have a “me first” attitude.
I wish all Wall Street Weather readers a Happy Thanksgiving holiday!
Monday, November 23, 2009
Tuesday, November 24, 2009
Moderately down, becomes choppy/mixed and turns positive going into the close.
Wednesday, November 25, 2009
Thursday, November 26, 2009
Markets closed for Thanksgiving holiday.
Friday, November 27, 2009
Weakest early; improves as the day progresses. (Stock market closes at 1:00 PM.)
*The rising sign (Ascendant) is the zodiac sign rising on the eastern horizon of the USA chart for 5:10 PM on July 4, 1776 in Philadelphia, PA.
**Jupiter ruled Pisces before Neptune was discovered in 1846.
Posted 11/22/2009 08:08:00 PM