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.

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.” ;-)

No disclosures.

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”

No disclosure.

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.)

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

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.

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.

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.

Nothing Gained: Banks To Repay TARP

Published by WallStreetWeather.net

Yesterday’s announcement by the Treasury that 10 financial institutions who took TARP funds totaling $68.3 billion have been approved to repay the money is a classic example of the unexpected twists and turns that occur when bold new initiatives are begun when Mercury is retrograde.

Mercury represents thinking, communication, and movement. The three week period three to four times a year when Mercury appears to be moving backward from Earth’s vantage point is better suited for putting the RE prefix in front of everything you do, rather than starting something from scratch.

Born when Mercury was retrograde in Libra (September 24-October 15, 2008), the TARP was troubled from the start as it was spawned from the panic that ensued following the Harvest Moon collapse of Lehman Brothers. The hastily written legislation to remove toxic assets from banks’ books first failed to pass the House on September 29, but by the end of that week was signed into law by President Bush.

Venus rules Taurus (banking and finance) and Libra (our relationships involving money). Libra is symbolized by the scales of equal balance representing fairness and equality to all parties involved. With Mercury retrograde in Libra, then Treasury Secretary Hank Paulson thought by injecting capital into the nation’s largest banks it would put the weaker banks needing more capital on an equal footing to those banks who could manage without it. In fact, Paulson said at the time that receiving approval for TARP money is a badge of honor as it symbolized a healthy financial institution. And the Treasury encouraged these healthy banks to use their TARP money to acquire other banks.

One month later with Mercury moving forward in Scorpio, what had been concealed now got revealed. Paulson admitted he had scrapped the original purpose of the TARP before Congress even approved the legislation. And the “healthy banks take TARP” game was up shortly after that when Citigroup needed an additional injection, followed by Bank of America (BAC) in January to help it digest its acquisition of Merrill Lynch.

During the Venus retrograde cycle in Libra’s opposite sign Aries (March 6 – April 17, 2009), banks became increasingly desperate to repay TARP funds after Congress and the Administration sought to stir up populist rage over AIG bonuses and executive compensation. TARP money had become a “scarlet letter,” as JPMorgan Chase (JPM) chief executive Jamie Dimon said in the bank’s Q1 earnings call April 16. Goldman Sachs (GS) proclaimed it was their “patriotic duty” to repay the TARP.

Now Mercury, Venus, and Mars are in Taurus. In fact Mars is exactly opposite where it was on the afternoon of October 13, 2008 when Paulson called the bankers into his office and told them they would “volunteer” to take TARP funds. Mars in Scorpio then reflected the banks indebtedness to the government. Mars in Taurus now reflects the action the 10 financial institutions have taken to strengthen their capital cushion in order to repay the loan.

In order for the banks to be completely free of the government, they will have to auction or buy back the government’s warrants estimated to be valued at up to $4.6 billion. And since it’s the “taxpayer’s money”, shouldn’t the auction be public so interested “taxpayers” could participate?
Between now and July 6, Mercury, Venus, and Mars in Taurus will challenge the Jupiter/Neptune alignment in Aquarius. All the optimism (Jupiter) that has sent the banking sector on a rocket ride (Aquarius) of rapid gains over the last three months could begin to evaporate from larger than anticipated credit card and credit derivative losses (Neptune).

Saturn rules time, life’s lessons, and structures. On July 3 Saturn in Virgo will be exactly where it was on October 13, 2008. The 10 banks have been approved to pay back the TARP, but what lessons did Wall Street and Washington learn from the experience? Lifting the TARP from some of the banks might feel like the financial system is working again, but without a new roof, the next storm could find parts of Wall Street flooded out again.

No disclosures.

WallStreetWeather.net Forecast For Week Of June 8, 2009

Summary Of Last Week’s Influences:
Monday’s news of GM’s bankruptcy filing was old news to a market addicted to growth (Jupiter) and its reflationary (Neptune) prospects. Bears view the ever expanding supply of Treasuries to be sold and the Federal Reserve monetizing the flood as increasing inflation through higher Treasury yields and higher commodity prices. By Friday commodities were dropping and the dollar was strengthening on the belief that the Fed could tighten monetary policy as soon as September (which is when the Fed stated in March it would complete its purchases of up to $300 billion of longer-term Treasury securities).

Jupiter conjoining Neptune in Aquarius has taken investor sentiment from deflation to inflation, as I wrote in a post last June. Now that a new government sponsored bubble has formed, will the Federal Reserve have the guts to prick it in time by raising interest rates as the usually dovish San Francisco FRB president Janet Yellen suggested in a speech Friday?

Summary Of This Week’s Influences:
Venus, the planetary ruler of banking and material assets, has now moved into its “home” sign Taurus until July 5. Venus had been in Aries since February 2, due to the planet from Earth’s vantage point appearing to move retrograde from March 6 to April 17.

Venus turning retrograde in Aries on Friday, March 6 corresponded with the S&P’s intraday low of 666.79 that initially spooked Wall Street. Retrograde planets tend to reverse trends, and after the DJIA and the S&P’s 12+ year closing lows the following trading day, the stock market has proven since then that 666 was truly a revelation of a market revival. Contrary to the propaganda spread by certain cultures and religions, 666 and Fridays resonate to the energy of Venus.*

The cycle of Venus in enthusiastic and fast moving Aries reflects the rapid rise of global stock markets and commodities. Aries likes to get in on the action first before others climb aboard. And since Venus rules banks, the banking sector was one of the biggest beneficiaries of the gains. The DJIA has gained almost 35% since the March low, but the KBW Bank Index (BKX) has gained close to 90%. I wrote in last week’s Forecast that Taurus the bull likes nothing better than watching their money grow. This energy’s weakness is being too slow to respond to changing conditions, and must keep in mind that as a pragmatic earth sign,** a paper profit is not an actual profit.

While Venus is just getting comfortable in Taurus, Mercury will complete its extended stay in Taurus, moving into its “home” sign Gemini late Saturday until July 3. The planetary energy of communication and movement has been in Taurus most of the time** since April 9, due to being retrograde May 7-30.

Due to Mercury’s retrograde cycle, this week will mark the third time that Mercury in Taurus will interact with Uranus (previously on April 24 and May 21) and Neptune (April 25 and May 20) on Tuesday, followed by Jupiter (April 22 and May 20) on Wednesday. The May dates listed represent Mercury’s retrograde encounter with these planets that reversed April’s upbeat thoughts. News can be conflicting and confusing (because it might just be a rumor); Jupiter’s tendency is to overreact.

With Mercury, Venus, and Mars in Taurus this week, a great deal of the market’s news and action will be related to banks and bankers.

While all the largest banks received a passing grade when the government released the results of the stress test on May 7 (the day Mercury went retrograde), Monday is the deadline for banks that were told to raise additional capital to submit their plans outlining how they will do so. (Banks have until November 9 to raise the additional capital.)

When the market opens on Monday, Citigroup (C) and General Motors will be replaced in the DJIA by Cisco Systems (CSCO) and The Travelers Companies (TRV). It is appropriate that Travelers replaces Citi in the Dow, since Citigroup was formed by the merger of Citicorp and Travelers Group in 1998. Citi spun off Travelers in 2002, and on April 2, 2004 the merged St. Paul Insurance Companies and Travelers Property Casualty began trading under the symbol STA. On February 27, 2007 the company was renamed Travelers and began trading under the ticker symbol TRV after reaching an agreement to reacquire its red umbrella logo from Citigroup.

Transiting Saturn in Virgo opposing Citigroup CEO Vikram Pandit’s progressed*** Sun in Pisces along with Pluto in Capricorn conjoining his natal Venus and challenging natal Jupiter in Libra, reflect the FDIC putting pressure on Pandit to resign, according to a report in Friday’s Wall Street Journal.

The WSJ cites the origins of the animosity between Citi and the FDIC emanating from the FDIC’s original consent to the shotgun marriage between Citi and Wachovia until FDIC Chairman Sheila Bair substituted higher paying suitor Wells Fargo (WFC) to marry Wachovia. I wrote about how the planetary energies were temporarily altering Pandit’s usually calm public persona then; subsequent articles about Pandit in New York magazine and now the Journal article confirm his anger did go off the deep end at the time.

While there are things Pandit could have done quicker and differently, he inherited the mess at Citi. As Chairman of the FDIC, Sheila Bair was against raising FDIC deposit insurance. Had FDIC insurance on bank deposits been raised permanently and early in the crisis it would have prevented the bank runs at IndyMac, Washington Mutual, Wachovia, and National City that particularly caused tremendous damage to the financial system and to consumers and small businesses.

I wrote back in January that I thought Bank of America CEO Ken Lewis might be forced into retirement in April. Lewis was forced to give up his Chairmanship on April 29, and the pressure is still on Lewis and the bank’s Board for management changes. Friday former Federal Reserve Governor Susan Bies and three other new members were added to BofA's Board.

On Thursday at 10 AM Ken Lewis will appear before a House Oversight Committee hearing on “Bank of America & Merrill Lynch: How Did a Private Deal Turn Into a Federal Bailout?” . Committee members will press Lewis to explain discrepancies between his public statements about the deal and what he said at his deposition in February to New York AG Cuomo. Fed Chairman Bernanke will be conspicuously absent at the hearing, although the Committee has requested numerous documents from the Fed. I guess Bernanke’s too busy meeting with the Fed’s new lobbyist to attend. Now that’s what I call transparency!

The Treasury will auction a total of $127 billion in short and longer term securities this week, and the market will be closely watching the results of Wednesday’s $19 billion in 10 year notes and Thursday’s $11 billion in 30 year bonds to see if investors continue to be concerned about all the government debt and the Fed’s excess liquidity stoking inflation.

Monday, June 8, 2009
Indices open down and improve to choppy/mixed to mostly positive.

Tuesday, June 9, 2009
Swings from negative to choppy/mixed to positive.

Wednesday, June 10, 2009
Positive

Thursday, June 11, 2009
Negative

Friday, June 12, 2009
Negative trend bias; improving conditions in afternoon.

*All of these so-called negative energies such as 666, the number 13, and in particular, “Friday the 13th” are energies that relate to females and feminine energy.

**Mercury was briefly in Gemini April 30 to May 13.

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

No disclosures.

Consumer Spending and Healthcare Seeking Balance in U.S. and China

Published by WallStreetWeather.net

As the ruler of the zodiacal sign Taurus, Venus represents money. And as the ruler of Libra, Venus represents our relationships involving money. Libra is symbolized by the scales of justice, as Libra energy engages in diplomacy to ensure each party is treated fairly and equally to keep the scales of justice balanced.

So it was appropriate that Treasury Secretary Geithner visited China while the Moon was in Libra, which tends to put people in a more cooperative mood, raising the potential that the parties coming together can reach agreement.

The USA was born with the Sun in Cancer challenging Saturn in Libra. The U.S. likes to talk about fairness, but seeks to tilt Libra’s scales of justice in its favor by touting our status (Saturn) as the world’s most powerful nation and the world’s reserve currency. The Sun challenging Saturn in Libra means the U.S likes to do this in a paternalistic, “father knows best” kind of way. The U.S. sees itself as a beacon of democracy and freedom, and seeks to promote those principles around the world. But those principles can be conveniently cast aside in exchange for a relationship with another country that has the material resources we want.

With the USA’s Saturn conjoining China’s Mercury and Neptune in Libra, the U.S. government is willing to overlook the fact that it is doing business with a communist regime with an abysmal human rights record. The U.S. is addicted to China’s cheap goods, along with the goods and services U.S. companies can establish in this emerging market. China’s Venus is in Scorpio, reflecting its position as the world’s largest holder of U.S. government debt. So let’s ignore the fact that the Treasury Secretary visited China but left just before the 20th anniversary of the Tiananmen Square massacre because his visit was about maintaining harmony (Libra) so the Chinese leadership remains confident (China’s natal Sun in Libra) about buying U.S. debt (Venus in Scorpio).

In a speech at Peking University, Geither said: “A successful transition to a more balanced and stable global economy will require very substantial changes to economic policy and financial regulation around the world. But some of the most important of those changes will have to come in the United States and China.” The Treasury Secretary then outlined what must be done to stabilize the two nation’s economies.

The symbol for Venus resembles a hand mirror, reflecting that the U.S. and Chinese economies have become too imbalanced in one direction. Geithner said: “In the United States, saving rates will have to increase, and the purchases of U.S. consumers cannot be as dominant a driver of growth as they have in the past.” The Treasury Secretary said that China needs to develop into a more domestically driven economy as “the world is not going to be able to look to the United States, as in the last few recoveries, and expect US consumption to help the world get out of this.”

Geithner spoke of what both countries are lacking when they look at their reflection in the mirror: the need for healthcare reform. To assuage the Chinese government that fiscal spending now is “critical to our long-term fiscal health,” Geithner said “we have to put in place comprehensive health care reform that will bring down the growth in health care costs, costs that are the principal driver of our long run fiscal deficit.”

The Chinese are big savers because despite living under a communist regime, China has a weak social safety net. According to the World Bank, families making less than $200 a year still manage to save 18% of their income. The Chinese save for education, retirement, and to pay for healthcare costs. When it comes to healthcare, China has such a free market capitalist system that even Republican members of Congress would probably prefer to hold on tight to their government sponsored healthcare benefits.

An excellent article by Geoff Dyer in the Financial Times (“Sickness of the savers”), describes how patients will not be admitted to a hospital in China until they pay cash up front and wait for reimbursement later. Once admitted, patients also need money to pay for bribes. Since up to 40% of a hospital’s revenue comes from profits from drug sales which are linked to doctor’s salaries, there are huge financial incentives for doctors to overprescribe expensive drugs and recommend patients take unnecessary tests.

China is moving toward rectifying this situation, committing to making health insurance a basic right. In 2008, the Chinese government committed to providing universal health insurance coverage, with the goal of getting 90% insured by 2011 and everyone by 2020.

In terms of spending and savings, the U.S. and China are mirror opposites. But in terms of ineffective health care systems, both nations follow the same path. Treasury Secretary Geithner is suggesting that the US and China’s paths will converge in both consumer spending and healthcare. What this means for the U.S. is that healthcare will become a right and we will be more balanced in the distribution of health services to all our people.

Saturn represents government and all types of structures. Saturn’s transit in Libra* will be even more influential during the time it overlaps with revolutionary Uranus in pioneering Aries and transformational Pluto in Capricorn. These planetary energies will impact key natal planets in both countries charts, particularly from mid July to mid August and November/December 2010 and March through August 2011, ushering in profound changes that bring China and the USA’s economic, physical and societal structures more into balance.

*Saturn will be in Libra from October 29, 2009 to April 18, 2010 and July 22, 2010 to October 6, 2012.

Related Post: “President Obama Declares ‘The Stars Are Aligned’ For Healthcare Reform This Year”

USA: July 4, 1776 5:10 PM Philadelphia, PA
People’s Republic of China: October 1, 1949 3:15 PM Beijing