WallStreetWeather.net Forecast For Week Of September 28, 2009

Summary Of Last Week’s Influences:
Mercury retrograde periods tend to interrupt trends in place prior to the retrograde. Since Mercury turned retrograde September 7, most of this period has continued the trends established prior to retrograde: rising equity prices, falling dollar, higher commodities – particularly gold, silver, and oil.

In last week’s Forecast I noted the planetary shifts and alignments that would increase market volatility and reverse trends. On the first trading day following the Autumnal Equinox, the major indices reached new 2009 highs while the dollar hit a fresh 2009 low following the release of Wednesday’s FOMC announcement. Suddenly stocks reversed, the dollar gained strength, and commodities weakened.

Information previously held in secret can get revealed during Mercury retrograde. (And new information released during Mercury retrograde tends to get revised or reversed after Mercury has begun moving forward.)

I wrote last week that the Sun challenging Pluto would bring information on nuclear issues and possibly some M&A activity. Leading his first meeting of the U.N. Security Council, President Obama got the Council to unanimously approve the “clear-safeguards” resolution, establishing the framework to take action against nations that use nuclear technology for military purposes. At the G20, President Obama revealed what he had been briefed on shortly after he won the election: that Iran has built a secret nuclear facility buried deep at an Islamic Revolutionary Guard base in the holy city of Qom.

It’s particularly important to be as clear and concise as possible when communicating during Mercury retrograde to avoid misunderstandings. The Sun represents leaders and chief executives, and with the Sun in Venus-ruled Libra (sugar/sweets), Cadbury CEO Todd Stitzer found this out the hard way when he “admitted there is some strategic sense in combining” Kraft and Cadbury, at a Bank of America investor conference in London on Wednesday. Two days later Stitzer said his views were “misconstrued.”

One M&A deal that was official last week is Dell’s (DELL) acquisition of Perot Systems (PER) for $3.9 billion. Speculation about Microsoft (MSFT) making an acquisition seems to surface when Mercury is retrograde, perhaps because the company went public years ago when Mercury retrograde. This time the speculation is Microsoft will acquire Electronic Arts (ERTS).

Last week NASA scientists rediscovered water molecules on the Moon. I say rediscovered as the Moon and its sign Cancer are part of the water element, representing our emotions, market sentiment, and consumer behavior. For instance, when we’re highly emotionally charged, our eyes get watery and produce tears.

Mars rules the color red and is hot and dry influence. Mars in Cancer (August 25 to October 16) creates weather conditions of draught and wildfires in some parts of the country while other areas are flooded with water. So it’s fitting that with Mars in Cancer, NASA would reveal more information about frozen water on Mars.

With Pluto in Capricorn (2008-2024), more discoveries will be revealed about what’s buried beneath the soil of the Earth, its satellite and the other planets in our solar system.

Summary Of This Week’s Influences:
After appearing from Earth’s vantage point to move in reverse since September 7, Mercury turns stationary direct Tuesday at 9:14 AM EDT.

Mercury turning direct on the USA’s challenging Mars/Neptune alignment, as well conjoining President Obama’s natal Mars reflects the Administration must determine soon what military action to take with our adversaries in Afghanistan. Mars challenging Neptune in the USA chart indicates that military action (Mars) in the name of idealism (Neptune) such as Vietnam, Iraq, and Afghanistan has never proved to be successful. President Obama must decide if we’re in Afghanistan to “nation build” or annihilate the Taliban and Al-Qaeda before determining the size and scope of the military effort. Since President Hamid Karzai might not represent a government we can “believe in,” it’s difficult to justify a nation building effort. The future of nation building has probably past; it’s more likely we will become “the terrorists to the terrorists.” The smartest strategists learn from their enemies.

Will the “faith-based rally” as David Rosenberg calls it, continue once Mercury begins moving forward? I think the bear is getting ready to awaken from hibernation – he’s just been a bit delayed.

Sir John Templeton once said, “The four most expensive words in the English language are ‘this time it’s different.’” Frankly, this time it truly is different. The Fed dropped interest rates to near zero and established all kinds of lending programs. Yet banks aren’t lending, and this time consumers are truly tapped out. What the Fed and the government still doesn’t get is that the traditional means of stimulating the economy will only have a temporary effect since the U.S. will not return to being a heavily consumer-based economy.

The next phase of the financial crisis will arrive when the current asset bubble bursts, since the Fed has already used up all its ammo. With Pluto in Capricorn, establishing a solid and sustainable economic foundation will take time. The government will have to continue to play a leading role in bringing about the massive transformation of the economy by confronting issues that politicians have put off for too long: healthcare reform, infrastructure and clean and cost efficient energy sources that support how we’ll live and work in the years to come.

Jupiter, Saturn, Uranus, and Pluto will be dynamically “interacting” with one another in full force less than one year from now. As these planets will be at the beginning of cardinal (action) signs, it will be time to make a fresh start in these areas. Since 2007, we have been in a “clean up phase” as the old ways of doing business and operating the economy will be ending. This is what the cycle of oppositions between Saturn (status quo) and Uranus (reform/revolution) from November 2008 to July 2010 is all about. Individuals, groups, and businesses who are working to maintain the status quo by engaging in extremist (Uranus) tactics may believe that is the way to “freedom” (Uranus), but they are the ones who will actually be left behind.

Aquarius rules space travel, and with the Moon in Aquarius and Mercury the messenger turning direct Tuesday, NASA’s MESSENGER spacecraft will make its third and final flyby of Mercury before entering Mercury’s orbit in 2011.

As above, so below. :-)

Monday, September 28, 2009
Indices choppy/mixed, vacillating between negative and positive; likely closes down.

Tuesday, September 29, 2009
Negative trend bias, but could see improvement in final hour.

Wednesday, September 30, 2009
Market improves as day progresses; closes up.

Thursday, October 1, 2009
Up early, then becomes choppy/mixed to negative.

Friday, October 2, 2009
Positive trend bias in the morning, then becomes choppy/mixed and likely turns negative by late afternoon.

No disclosures.

Financial Markets Reverse on the Fed’s Mortgage Message

Published by WallStreetWeather.net
As described in the Weekly Forecast, stocks and the dollar made a sharp and sudden reversal yesterday afternoon, as Wall Street rethought their initial bullish reaction to the FOMC announcement. After climbing 88.12 points to a fresh 2009 high, the Dow reversed, closing down 81.32 points to 9.748.55. And after hitting a new 2009 low, the dollar reversed.

What was “profound” is that the Fed has unequivocally telegraphed that long term interest rates are on a gradual trend up and short term interest rates are being protected at near zero for at least the next several months. This indicates a gradual unwinding of the Fed’s balance sheet and the transition of the finance industry from direct Federal Reserve support through the purchase of their securities.

In addition to what I wrote about Saturn challenging Pluto forcing the Fed to contract its purchase of mortgage securities, Saturn/Pluto represents the need for the Fed to slowly (Saturn) unwind the lending (Pluto) programs the Fed created to expand the type of collateral and duration of its discount window lending. This morning the Fed released a schedule that gradually scales back the Term Auction Facility (TAF) and the Term Securities Lending Facility (TSLF). The Fed will reduce the maturity dates “by early next year to a single cycle of 28-day funds offered every 28 days.” The Fed will also “assess whether to maintain a TAF on a permanent basis.”

Today the stock market reversed its early gains at 10:00 AM after the Fed released the new TAF and TSLF schedules, the same time data on August existing home sales was released that showed a decline instead of an anticipated increase in sales. The fact that slightly over one third of existing home sales continue to be for “distressed homes” and that 70% of homes sold were priced below $200,000, says that even with the Fed supporting low mortgage rates combined with the government’s homebuyer tax credit,* most homes for sale in most sections of the country are still not properly priced.

According to mortgage data tracker HSH Associates quoted in the WSJ Ahead of the Tape column, without the Fed’s support the national average conventional fixed rate mortgage would be about 5.9% vs. around 5.04% now. Once the Fed concludes its purchases by the end of the first quarter of 2010, I think it is more realistic to expect that mortgage rates will gradually rise to the 6.5% to 7% range.

Slack in economic terms represents a lower than normal level of resource utilization. Resources include everything from labor, factories, unoccupied homes and apartments, to unsold motor vehicles. The important thing to note about resources is they’re not fungible; excess capacity in one area of the economy cannot be matched with overused capacity in another. Some forms of capacity can simply grow stale and never be used again.

Excess capacity in the auto industry provides no relief to the need for next generation semiconductor manufacturing, just as excess capacity in luxury housing and luxury hotel rooms cannot easily be transformed into utilitarian housing and utilitarian hotel rooms. Any discussion of “slack” controlling inflation has limited utility itself.

You can still have inflation with excess capacity when operating costs are rising, a situation experienced in the stagflation of the 1970s to early 1980s. A prime example is a house or condo that could be purchased for under $200,000 that has homeowner fees, utility costs, and taxes as high as $1,000 per month.

The Fed “expects that inflation will remain subdued for some time.” With expansive Jupiter conjoining Uranus in 2010, sharp and unexpected price spikes could bring a sudden whiff of ‘70s style stagflation as some areas of the economy operate with excess capacity and other areas are more stressed.

*Banks and the real estate industrial complex have been lobbying hard for Congress to extend this program authorized under the stimulus bill beyond November 30. Republican Senator John Isakson has reintroduced his Senate bill to not only extend the tax credit until the end of 2010, but increase the credit to $15,000 and eliminate the “first time” buyer clause. For all of the opposition’s rhetoric about “government-run healthcare” and complaints that healthcare reform will increase the federal deficit, it’s interesting that deficits fly out the window when it comes to real estate. And somehow government sponsored housing subsidies do not infringe on their so-called free market capitalism.

Financial Markets and the Autumnal Equinox

Published by WallStreetWeather.net
Autumn began in the northern hemisphere at 5:19 PM EDT today when the Sun entered Libra. Libra represents balance, and at the Equinox the hours of day and night are equal in length.

Although financial markets do not always decline in the autumn (the DJIA and the S&P 500 reached record highs in October 2007), Wall Street has a tendency to equate the beginning of Fall with a fall in the stock market. As Barron’s columnist Randall Forsyth describes in “It’s the First Day of Fall – In More Ways than One,” “the number of huge reversals that took place on or about that date is stunning.”

The Sun represents speculation. Libra is ruled by Venus, the planetary ruler of money, banks, and moveable assets. As the ruler of all types of relationships, arrangements, and alliances, Libra represents parties coming together to reach agreement on a fair exchange of value. Financial relationships broke down one year ago when counterparties refused to trade with one another and banks refused to lend to one another.

Cardinal signs* such as Libra usher in the start of each season. These signs initiate new developments and take action on existing matters. Libra is an air*** (mental) sign, and during the Fall season (September 22 to December 21**), being out in the crisp clear air can help to clear people’s thinking regarding whether financial values have become out of balance in one direction or the other.

The New Year actually begins at the Vernal Equinox (around March 20) when the Sun enters Aries, the first sign of the zodiac. The Sun represents the life force, and the Sun in Aries expresses bold self-confidence and enthusiasm, eager to start something new. In Aries’ opposite sign Libra, the Sun’s sense of self-identity is shaped through outside influences and relationships with others. Financial markets have a full plate of news to digest now as they focus on year end. Congress is always in session during this time and the Supreme Court begins a new session the first Monday in October of each year (Libra is symbolized by the scales of justice and equality). And the start of each new season brings quarterly earnings reports.

After Art Cashin, director of floor operations for UBS Financial Services, mentioned the Autumnal Equinox on CNBC’s Squawk Box this morning, Joe Kernan began making silly comments about how the Full Moon “sucks our brains up into our head.” The Moon rules our emotions which can get highly charged and go to extremes at the Full Moon as it marks the peak of the Moon’s monthly cycle when the Moon opposes the Sun. The Autumnal Equinox functions as a “seasonal Full Moon,” as Libra marks the halfway point in the cycle begun at the Vernal Equinox (“New Moon”). What’s happening now grabs our full attention.

Mercury represents thoughts and communications, and Mercury was retrograde during or just prior to the time of many of the biggest market reversals, such as the 1929 and 1987 crashes. (Mercury is retrograde until September 29.) Planets shifting into new signs or planets appearing to change direction from Earth’s vantage point at the time of the Autumnal Equinox tend to increase the chances of a market turning point. The Sun rules gold. Venus (money) moved into Libra conjoining the Equinox Sun at the same time Saturn (government) turned direct in 1931 when the British government took the pound off the gold standard. Gold stocks peaked at the 1980 Autumnal Equinox when Saturn entered Libra; Saturn will return to Libra for the first time since then on October 29.

Other factors contributing to the propensity of market reversals are due to the Libra Sun and other planets in cardinal signs forming challenging alignments to cardinal planets in the USA and NYSE charts at the same time eclipses or other major planetary alignments are present.

Planetary cycles repeat themselves but express their energies differently each time. During the early 1930s, Saturn (economic contraction; government), Uranus (shocks/sharp price movements; reforms), and Pluto (extremes; wealth/bankruptcy) formed challenging alignments to each other in cardinal signs. In 2010 these three planets will once again enter cardinal signs and Uranus will be in Aries for the first time since the Great Depression.

Since the Sun rules speculation, it is not surprising that market watchers follow Sunspot activity beyond its effect on communications and weather patterns. The Sun in 2008-09 has been in the solar minimum part of its 11.1 year cycle of activity, the lowest level since 1913. (The early 1930s were also a period of solar minimum.) Art Cashin mentioned that today marked the sighting of a second sunspot that has formed on the Sun, part of Solar Cycle 24 predicted to peak in May 2013.

Frequent reversals are common in financial markets during the time Mercury is retrograde as the market tends to lack a clear sense of direction. The Barron’s article talks about being prepared for market reversals, particularly in the currency market. In a previous post I described how the Sun challenging Pluto in Capricorn and Mercury opposing Uranus on the day of the September 23 FOMC announcement could reverse currency markets, affect foreign purchase of Treasurys, and contract the amount of mortgage securities the Fed purchases. Planets entering cardinal signs influence Fed policy actions; transits by Pluto, Saturn, and Uranus between 2008-11will totally transform the “purpose and scope” of the nation’s central bank.

The indices celebrated this Autumnal Equinox by making new 2009 closing highs. The Fed’s constant reiteration that record low interest rates are likely to remain low for an extended period of time, along with its purchase of Treasurys and mortgage securities, has provided the rocket fuel for the stock market, the bond market, and commodities reacting to the weaker dollar.

Whether or not the bear market returns this autumn remains to be seen. Financial markets have the potential to make more pronounced market moves around the following days:

September: 23, 28, 29
October: 5, 8-9, 12-16 (esp. 13 and 15), 19, 28-29
November: 1-2, 4-5, 9-11, 16, 19, 23, 25, 30
December: 1-2, 7, 11, 14-16, 21(Winter Solstice 12:47 PM EST)

Despite the physical impact the Sun, Moon and planets exert on our Earth, Barron’s is actually kinder than most in referring to planetary cycles as “alternative explanations” for the market’s behavior. The media may joke about Full Moons, Equinoxes, and Mercury retrograde, but Wall Street is watching, sometimes publicly but most of the time in the shadows.

*The other cardinal signs are Aries (Spring), Cancer (Summer), Capricorn (Winter).
**Fall 2009. Depending on the year, these dates can vary by a day or two.
***The other air signs are Gemini and Aquarius.

WallStreetWeather.net Forecast For Week Of September 21, 2009

Summary Of Last Week’s Influences:
The stock market celebrated the one year anniversary of the week of Lehman Brothers collapse and the ensuing financial panic on Wall Street by closing at 2009 highs on Friday. So far Mercury retrograde has not reversed the market’s upward trend. Once again, the Fed’s ultra loose monetary policy is recreating asset price inflation in the stock market as investors chase yield in riskier investments.

Taking Q&A after giving a repeat of his Jackson Hole speech Tuesday, Fed Chairman Bernanke said the recession was “from a technical perspective very likely over at this point,” adding that employment will take longer to recover.

Bernanke’s comments came on the day Saturn opposed Uranus for the third time. Saturn reflects the government sponsored bull market that Uranus has taken from the unexpected multiyear lows of early March to levels higher than imagined. Despite encouraging signs of economic improvement, the stock market is priced for economic perfection which is just not possible when Wall Street and the consumer are living in parallel universes.

Uranus represents extremes, and just as the market was overdone on the downside, the market has went to the opposite extreme. If the bulls really stood behind their conviction, then why have long term out of the money Puts on the indices and most stocks gotten so pricy? These Puts were cheap a couple of years ago when the market was on its way to reaching record highs.

On the geopolitical front, Mercury retrograde challenging Pluto late last week brought a reversal of the Bush Administration’s plan to place 10 ballistic missile interceptors in Poland and radar in the Czech Republic. In the new plan existing weapons would be used, equipping the Navy’s ship-based missile defense system with Aegis radars and antimissile interceptors. These enhanced naval vessels would then be deployed to effectively intercept Iranian short and medium range missiles to protect Israel and other U.S. allies. The Pentagon will not only save millions of dollars, but having a ship-based defense system provides the portability that a fixed land based system does not.

Summary Of This Week’s Influences:
Venus (money/banking) moves into Virgo today until October 14. Venus together with Mercury in Virgo (until October 9) takes a critical look at valuations and financial arrangements such as the compensation practices at the nation’s largest banks. Venus in Virgo tends to be more risk averse than Venus in Leo (August 26-September 20).

Due to Mercury being retrograde, Mercury in Virgo will repeat its conjunction to Saturn early Tuesday morning and oppose Uranus Wednesday morning. Mercury conjoining Saturn tends to be a bearish influence as investors take a more cautious view. Mercury first conjoined Saturn on August 17 (indices closed down 2%+ that day), and will make its final conjunction to Saturn October 8.

Mercury opposing Uranus for the second time on Wednesday tends toward the opposite extreme. Mercury opposed Uranus on August 21, a day the indices made fresh 2009 highs. (Mercury will oppose Uranus for the third time at the October 4 Harvest Moon.)

Fall officially begins at 5:19 PM EDT Tuesday when the Sun enters Libra until October 23. With the New Moon in Virgo last Friday conjoining Mercury retrograde and Saturn so close to the time of the Autumnal Equinox, new action will be taken on established issues such as financial regulatory reform and healthcare. Both the House Financial Services Committee and the Senate Banking Committee will be holding hearings this week to address the Administration’s financial regulatory reform proposal, systemic risk issues, and an examination of TARP one year later.

The Sun in Venus-ruled Libra challenging Pluto in Capricorn Wednesday accentuates these themes, shining the light on the financial regulators themselves and their lack of changing the practices that got us into the crisis at the banks they regulate. Pluto represents what is kept hidden, and if the Federal Reserve was truly operating with greater transparency as Chairman Bernanke claims, why would the House be holding a hearing this week on H.R. 1207 The Federal Reserve Transparency Act of 2009 (S.604: The Federal Reserve Sunshine Act)?

The FOMC will conclude its two day meeting on monetary policy Wednesday while all of these planetary alignments are taking place. While the FOMC announcement always attracts attention, there could be something profound emanating from Wednesday’s announcement. It could reverse currency markets and affect foreign purchasers of Treasuries.

Pluto rules mortgages. As Saturn enters Libra October 29 and challenges Pluto (exact November 15), the Fed will have to contract the amount of mortgage securities it purchases confirming the scheduled wind down at year end.

The Sun represents leaders, and Libra represents diplomacy. Each year when the Sun enters Libra, the world’s leaders gather at the U.N. General Assembly. President Obama will be playing diplomatic host this week. On Tuesday the President will hold a joint meeting with Palestinian Authority President Abbas and Israeli PM Netanyahu to restart peace talks between the two sides.

The Sun challenging Pluto describes that peace talks between Israel and the West Bank Palestinians will likely be unsuccessful because of the missing parties from Gaza and Lebanon. It’s fruitless to pretend that those who are distasteful don’t get an equal seat at the negotiating table. Pluto rules nuclear issues, and on Wednesday when the alignment will be exact, President Obama will chair a summit-level meeting of the U.N. Security Council on a resolution on nuclear nonproliferation and disarmament.

Then at the end of the week the President will host the G20 in Pittsburgh. Even though financial overhaul measures to prevent global systemic risk as well as climate change is the focus of the agenda, most leaders seem primarily focused on bankers’ compensation.

With Mercury having shifted back into its home sign Virgo for the remainder of the retrograde cycle, market volatility could increase.

Monday, September 21, 2009
Negative.

Tuesday, September 22, 2009
Negative.

Wednesday, September 23, 2009
The Sun challenging Pluto could bring merger news today. The Sun/Pluto and Mercury opposite Uranus tends to be a positive influence, but this influence could weaken and reverse in the afternoon.

Thursday, September 24, 2009
Choppy/mixed to negative trend bias.

Friday, September 25, 2009
Negative, then choppy/mixed to improving conditions that could reverse in afternoon.

Judge Rejects Bank of America/SEC Settlement, Sets February 1 Trial

Published by WallStreetWeather.net
On the day that Lehman Brothers filed for bankruptcy, Bank of America CEO Ken Lewis was sipping champagne with Merrill Lynch CEO John Thain to celebrate the announcement of the marriage of BofA and Merrill Lynch following their whirlwind weekend courtship.

Today a one year anniversary present was delivered from Judge Jed S. Rakoff who rejected the $33 million settlement BofA had agreed to pay the SEC for having “materially lied to its shareholders” by failing to disclose in the merger proxy filing that Merrill Lynch could pay up to $5.8 billion of the $50 billion merger in bonuses and year end compensation to Merrill executives prior to the January 1, 2009 merger. The judge has given BofA and the SEC until September 21 to file with the Court in preparation for a February 1, 2010 trial.

Throughout his Memorandum Order, Judge Rakoff reiterated that his primary reason for rejecting the settlement is that “the notion that Bank of America shareholders, having been lied to blatantly in connection with the multi-billion dollar purchase of a huge, nearly-bankrupt company, need to lose another $33 million of their money…is absurd.”

Unlike most government regulators, economists, and media pundits who believe shareholders should be punished for the bad decisions made by senior management, Judge Rakoff’s ruling shows he clearly understands shareholders are very rarely able to influence management’s decisions. How do shareholders ever really know for sure what the company’s true state of financial health is even if they read SEC documents and press releases and listen to conference calls that convey one thing, only to find out the information was not true? All the while the Federal Reserve and other government regulators remained silent.

Institutional investors (i.e. mutual funds) have the largest influence on corporate management who they will almost always side with in order to retain the company’s 401k plans and other business. Inflicting moral hazard by wiping out shareholders has hurt millions of individual investors while the executives of these failed companies walked away with millions.

In response to Judge Rakoff wanting to know why the SEC deviated from its normal policy “to go after the company executives who were responsible for the lie, rather than innocent shareholders,” the SEC said their investigation pointed to BofA and Merrill lawyers who drafted the shareholder proxy and made the disclosure decisions about paying the bonuses. Judge Rakoff then asked the SEC why they imposed penalties “on the victims of the lie, the shareholders” instead of the lawyers.

And get this: BofA “vigorously asserts that the proxy statement, when read carefully, is neither false nor misleading.” Why? Because the bonus schedule was not attached to the proxy statement! However, BofA stated to Judge Rakoff that even if the proxy was misleading, “the misstatements were immaterial because (it) was widely acknowledged in the period leading up to the shareholder vote that Merrill intended to pay year-end incentive compensation.” Even the SEC found that excuse “hollow” as relying on “media speculation” cannot be equated on the same level as a company’s SEC filings.

Judge Rakoff notes that although BofA provided “voluminous papers protesting its innocence, BofA never actually provides the Court with the particularized facts the Court requested, such as precisely how the proxy statement came to be prepared, exactly who made the relevant decisions as to what to include and not include so far as the Merrill bonuses were concerned, etc.”

Regarding the $33 million settlement, Judge Rakoff writes:
“But all of this is beside the point because, if the Bank is innocent of lying to its shareholders, why is it prepared to pay $33 million of its shareholders’ money as a penalty for lying to them?”

Judge Rakoff acknowledges that BofA’s decision to settle was probably a “business judgment,” but finds it “difficult to believe that litigating this simple case would cost anything like $33 million.” (Obviously BofA wanted to keep one of their regulators happy and get the issue out of the news ASAP!)

In a footnote, Judge Rakoff remarked: “Undoubtedly, the decision to spend this money was made even easier by the fact that the U.S. Government provided the Bank of America with a $40 billion or so ‘bail out,’ of which $20 billion came after the merger.” (Remember that BofA told Bernanke and Paulson the bank would walk away from the deal without government assistance to cover Merrill’s projected $20 billion loss.)

In addition to the $33 million fine, the SEC forbids BofA “from issuing false or misleading statements in the future.” Since when should companies EVER lie or conceal information from shareholders?!

Judge Rakoff concludes that “the SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the Bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth.”

BofA claims they’re ready to litigate, and Judge Rakoff doubts the SEC will drop the charges against BofA. Additionally, various newswires are quoting the Associated Press that New York AG Andrew Cuomo is preparing a belated anniversary gift of civil charges against some of the highest ranking BofA executives. And the House Oversight Committee has not finished its investigation into the secret deal reached between Ken Lewis, Bernanke, and Hank Paulson to ensure the merger took place as planned.

To quote Judge Rakoff, “the truth may still emerge.” Saturn represents the law of cause and effect. On October 29, Saturn will move into Libra, the sign represented by the scales of justice. Saturn will then form a tense alignment to Pluto in Saturn-ruled Capricorn, exposing all kinds of secret arrangements between the government and corporations. The energies of Saturn/Pluto will seek to bring what is unfair, unjust, and out of balance back into equilibrium through digging deep to get to the root cause of the imbalance. As Saturn represents government and Pluto represents people in positions of power, government officials can come under just as much scrutiny as corporate leaders.

Banks will particularly come under scrutiny as Libra is ruled by Venus (banks). At the same time, Saturn and Pluto will form challenging alignments to the USA natal Venus and Jupiter, reflecting that these events could have a big impact on the financial system. The second Saturn/Pluto alignment will exactly occur at the time Judge Rakoff has scheduled the trial. Ken Lewis was already stripped of his BofA Chairmanship in April, and he has seen that both the Bush and Obama Administrations have no compunction removing CEOs. And as I have previously written, Saturn, Pluto and other planetary transits will bring new scrutiny to the Federal Reserve. Bernanke might begin to wish he had not been reappointed.

To quote a favorite expression of Oprah Winfrey, “what I know for sure” is that our judicial system could certainly use more common sense and shareholder friendly judges like Judge Jed S. Rakoff.

WallStreetWeather.net Forecast For Week Of September 14, 2009

Summary Of Last Week’s Influences:
Mercury represents trading one currency for another. Since Mercury turned retrograde, the value of the U.S. dollar to the world’s major currencies has declined to new lows for the year. On Friday the dollar index (DXY) hit a 52 week low, and made a new 2009 low against the euro. As Mercury stationed retrograde, the Chinese government expanded its plans to internationalize the renminbi, and a report by the U.N. Conference on Trade and Development said the dollar’s role as the world’s reserve currency should be reduced.

The stock market’s continued upward trajectory also weighed on the dollar, as the Fed and other government officials continue to reiterate fiscal stimulus won’t be reversed anytime soon. On the six month anniversary of the indices hitting multiyear lows on March 9, the S&P 500 has risen over 50%. (1933 was the only time in a six month period the S&P has exceeded that rapid gain.) One day before the 9/11 attacks, the Dow closed at 9,605.51; on Friday the Dow closed at 9.605.41.

Mercury turning retrograde Monday brought the return of news about takeover speculation after Kraft’s (KFT) attempt to buy Cadbury for $16.7B was rejected by the confectionary company. Pluto rules M&A activities, and its energies were also pronounced as Pluto turned direct September 11. Any company that makes a never before fresh offer to acquire another company during Mercury retrograde will probably end up regretting it, but Wall Street banks only care about rejuvenating the dealmaking to collect those fat fees.

In last week’s Forecast I wrote about gold’s rapid rise since Venus entered Leo (August 26-September 20). As the mythological lord of the underworld, Pluto rules the wealth extracted from under the Earth.* When planets appear from Earth’s vantage point to be stationary, their energies are more pronounced. Pluto was stationary all week, and (Sep.) gold reached a new record close of $1,004.90 an ounce Friday when Pluto turned direct.

Dollar weakness is increasing the price of gold as investors use gold as a hedge against overly accommodative monetary policies. Another reason for gold’s rise at this time is that gold is experiencing its Saturn return from its all time record high of $850.00 on January 21, 1980. (On October 2, Saturn in Virgo will be exactly where it was when gold reached its record high.) Back in 1980 gold was being bought as a hedge against record high inflation, as Saturn (fear) was challenging Neptune (inflation) in fiery Sagittarius. Neptune in fire signs tends to elevate inflation, and in Jupiter-ruled Sagittarius, inflation rapidly expands.

While I foresee inflation coming sooner than most of Wall Street expects, the above explanation describes why I do not foresee inflation rising to match the levels of the 1970s-early 1980s. And it is for this reason that I do not believe gold will break its 1980 record. Because in inflation-adjusted terms, gold’s real record high in 1980 was $2,284.99. Gold bugs tout that gold has never gone down to zero, but it’s no inflation hedge either. (And the potential for loss is only slightly above Lehman Brothers.)

Of course there are those investors who feel better owning gold during times of instability. Pluto turning direct together with Mercury retrograde reinforced the old tensions between the U.S. and Russia, Iran, and North Korea. Pluto rules nuclear issues, and Russia is not cooperating with the West on imposing further sanctions against Iran who like North Korea, has made it clear it will continue to enrich uranium.

Pluto represents covert activities, and yesterday the Israeli Intelligence Affairs minister admitted Prime Minister Netanyahu was not “on tour” at an Israeli security installation as had been reported, but instead made a secret visit to Moscow on Monday. The Russian newspaper Kommersant speculated the trip’s purpose could relate to the possibility of Israel planning to attack Iran. The Middle East does appear to have the potential to be a major hot spot for the three months beginning with the September 22 Autumnal Equinox.

Related Pluto Post: “Fed Pushes Banks To Buy Ginnie Maes To Create Illusion Of Healthier Balance Sheets”

Summary Of This Week’s Influences:
We have arrived at the one year anniversary of the week that saw the collapse of Lehman Brothers, the marriage of Merrill Lynch to Bank of America, the 79.9% government solution for AIG, and the panic that spread to the doorsteps of Morgan Stanley and Goldman Sachs.

President Obama and Fed Chairman Bernanke are scheduled to give speeches commenting on the first anniversary of Lehman’s collapse. Bernanke will probably use the opportunity to repeat how he was impotent to help because Lehman’s problems were beyond the powers of the Fed, despite Section 13.3. With Mercury retrograde, Bernanke will likely also repeat his claim he saved the world from “Depression 2.0.” But other than the fact that there is less competition on Wall Street, what has fundamentally changed? The Bush Administration’s policy of demanding moral hazard has created banks that are even bigger than those previously deemed too big to fail. Government welfare programs have helped to put many of the banks on course for record profits and executive compensation this year while consumers are hit with fewer banking choices, higher fees and higher consumer interest rates despite the central bank’s monetary policy.

As Gretchen Morgenson points out in her column today, “awarding increased power to those who failed in their oversight duties flies in the face of all notions of accountability.” Except for Hank Paulson and Christopher Cox, all the major financial regulators are still running the show now (and Bernanke has been renominated). Or as Morgenson writes: “Imagine hiring Angelo R. Mozilo, the former chief of Countrywide Financial, to run a global financial institution.” Federal Reserve officials had taken up residence at Lehman’s headquarters since Bear Stearns collapsed in March, but they did nothing and allowed Dick Fuld and the other top executives to project a positive scenario to shareholders up to the very end.

Saturn represents life’s lessons, and during Saturn in Virgo the lesson is about accountability. Tuesday marks the third time that Saturn opposes Uranus in Pisces. Uranus represents surprises and shocks to the system that serve as a wakeup call to change what has become inefficient (Saturn in Virgo).

The first Saturn/Uranus opposition occurred on Election Day and was quite literal as Saturn represents the establishment and elderly persons, and Uranus represents “change” and the younger generation. Oppositions are like a seesaw that tilts too far to one direction; what’s needed is to balance the positive energies of both planets. The February 5 opposition was skewed towards Saturn’s end as the market feared what was lurking on banks’ books would not pass the stress test, forcing the government to nationalize the banks. Within one month of these oppositions, the stock market hit new lows but then Uranus, aided by giant Jupiter and bubble blowing Neptune in Aquarius (the sign ruled by Uranus), tilted the seesaw in the other extreme.

The indices reached new 2009 closing highs Thursday and intraday highs Friday. Although the stock market has remained turbulent free so far, it is only a matter of time (Saturn). The easy money riding up on future projections (Uranus) has been made. Saturn represents fundamentals, and Saturn in Virgo can get pretty nitpicky. Without fundamental support, the stock market has limits (imposed by Saturn’s infamous rings) as to how much higher it can go.

Past performance (Saturn) does not indicate future projections (Uranus), and Mercury retrograde could alter the opposition’s previous patterns of market behavior. However, as Saturn approaches a challenging alignment to Pluto (exact November 15), more previously undisclosed information will likely surface regarding the actions taken by government officials during the financial crisis. And Congress will likely pass some type of financial regulatory reform.

October 15 marks the midpoint of the Saturn/Uranus opposition and Saturn challenging Pluto. Mars (action) reaches the degree of the July 21 Solar Eclipse that day. The eclipse conjoined the Federal Reserve’s natal Neptune and opposed the USA’s natal Pluto. As Pluto represents the extremes of massive wealth and massive debt and bankruptcy, some more financial lessons could be in store as part of the planetary curriculum.

Unlike the prior two Saturn/Uranus oppositions, the Sun (Thursday) and Friday’s Virgo New Moon intensify these energies. The Virgo New Moon raises new questions and brings evaluations of old issues. Virgo is ruled by Mercury which retrogrades back into Virgo late Thursday until October 9. (Mercury was previously in Virgo August 2-25). Prior to Mercury’s shift Thursday, Mercury in Libra will once again challenge Pluto (previous time was August 26). Secret information could be revealed, potential for currency and other types of market manipulation, and potential geopolitical sabre-rattling.

To top things off this week, Venus (money/banks) in Leo (stock market) will oppose Neptune (euphoria/panic) in Uranus-ruled Aquarius (unexpectedly sharp and sudden moves). Adding to the potential volatility and choppy trading will be Friday’s quadruple options expiration that can create added volatility a couple days beforehand.

Monday, September 14, 2009
Negative.

Tuesday, September 15, 2009
The stock market closed sharply up on the prior two oppositions of Saturn and Uranus (11/4/08 and 2/5/09), but today could find the indices choppy/mixed, swinging in both directions. If the market turns out to be bullishly up as in the past, it could likely start to lose momentum or even reverse into the close.

Wednesday, September 16, 2009
Negative.

Thursday, September 17, 2009
Up early, then becomes choppy/mixed to negative.

Friday, September 18, 2009
Choppy/mixed to positive trend bias.

*However, oil is more closely related to Neptune, the ruler of chemicals and liquids that form bubbles.

Fed Pushes Banks To Buy Ginnie Maes To Create Illusion Of Healthier Balance Sheets

Published by WallStreetWeather.net
Pluto rules all forms of debt and Capricorn represents the government. Since Pluto entered Capricorn in 2008, the government has virtually taken over the mortgage market through purchasing mortgages securitized by Fannie Mae (FNM), Freddie Mac (FRE), and the FHA.

With Capricorn’s planetary ruler Saturn in Virgo, the government is advising banks to make their balance sheets appear healthier. Virgo is the accountant, and Saturn in Virgo tends to be cautious and conservative about the risk level of assets on a bank’s books. Saturn in Virgo reflects bank lending standards for consumers have become so risk adverse that banks will only issue mortgages that are backed by or could be sold to the government.

Uranus in Pisces since 2003 brought the boom and bust of the credit bubble, a combination of the Federal Reserve’s overly accommodative monetary policy and Wall Street’s financial alchemy. With Saturn in Virgo opposing Uranus in Pisces (2008-2010), government regulators are actually encouraging banks to buy Ginnie Mae securities as a new way to reduce banks total assets on a risk-weighted basis. Pisces represents illusions. Since Ginnie Mae bonds (explicitly guaranteed by the government) have a “risk weighting” of 0%, banks who own these bonds do not have to tie up capital against them. This compares to Fannie Mae and Freddie Mac’s 20% risk weighting and privately issued MBS that have risk weightings of at least 50%. Fannie and Freddie only carry an implicit guarantee and private MBS no government guarantee at all.

In “Banks Load Up on Mortgages, in New Way,” The Wall Street Journal reports that instead of using the money they received from the TARP program to jump start lending, some banks are using taxpayers money to buy Ginnie (FHA) securities to raise their total risk-based capital ratio above the 10% level that regulators require for a bank to be considered “well capitalized.” As of June 30, banks and thrifts were holding $113.5 billion of Ginnie securities, versus $41 billion year over year.

First State Bank of Union City Tennessee admits it used “a significant portion” of the $20 million the bank received from the TARP program to buy Ginnie securities. And the Journal reports that Federal Reserve officials encouraged Warren Bancorp, a small Michigan lender to buy millions of dollars of Ginnie securities as “the quickest and the least costly option” to address the bank’s depleted capital ratios due to rising loan losses.

There are two illusions at work here. One is that banks buying Ginnie Maes does not actually shrink banks balance sheets or remove troubled assets. And just because Ginnie Maes are backed 100% by the government does not mean they have no interest rate risk. The Journal article doesn’t mention the average term length banks are purchasing Ginnie securities, but when interest rates rise the value of the securities will fall if banks need to liquidate them.

Additionally, bank actions to buy government backed mortgage securities with TARP funds imply they are carrying a negative interest rate margin on these transactions. Remember that the TARP preferred stock pays the government a 5% dividend and the highest rates on these MBS securities are less than 3.5%.

Some large regional banks with excess low or no cost deposits have wisely parked them in relatively short-term (1 to 3 year) Fannie, Freddie and Ginnie bonds. The Fed has indirectly encouraged this behavior by implying rates will stay low until the recovery is proven, a long period into the future.

Pisces rules interest rates. As expansive Jupiter conjoins Uranus in Pisces in 2010, inflation could take a sharp and sudden spike up. As Jupiter (expansion), Saturn (contraction), and Uranus (future projections) change signs and shift into the fire and air elements during 2010, the Fed will need to raise rates much faster than they ever anticipated lest Bernanke enables yet another financial crisis.

Demand for Ginnie securities has kept FHA mortgages rates low, but the flight from Fannie and Freddie backed securities could raise mortgage rates for most borrowers unless the Fed continues to buy their securities. I wrote back in June that the two previous oppositions of Saturn and Uranus* (November 4, 2008 and February 5, 2009) brought about a new phase of the financial crisis that caused the stock market to sharply decline within one month of the opposition.

The next opposition of Saturn and Uranus will occur on September 15. The Sun represents leaders, and the day before the September 18 New Moon in Virgo, the Sun in Virgo will conjoin Saturn and oppose Uranus while Virgo's ruler Mercury re-enters Virgo. Meanwhile, Venus (banks) in Leo (stock market) opposes Neptune (illusion) in Uranus-ruled Aquarius the same day Saturn opposes Uranus.

This could mean the Fed and the other leaders of the financial regulatory agencies could face detailed questions and criticisms about their policies in the coming weeks ahead. Financial markets might be forced to remove the rose colored glasses and take a second look at the real state of health of the banks and the broader economy and adjust their valuations accordingly.

*The remaining oppositions of Saturn and Uranus will occur on April 26 and July 26, 2010.

Related Post: “Wall Street and the Consumer in Parallel Universes”

WallStreetWeather.net Forecast For Week Of September 7, 2009

Summary Of Last Week’s Influences:
Contrary to an “overblown reaction” to the downside Friday, the market reacted positively to the August employment report, although less enthusiastically than some pundits would have expected.

The good news is that job losses are showing signs of moderating even though payroll losses for June and July were revised upward. The media primarily focused on the higher than expected increase in the unemployment rate to 9.7%. The unemployment rate will likely continue to climb as economic conditions show signs of gradual improvement, as more people become motivated to seek employment opportunities after previously giving up.

Analysts and economists are starting to declare that August marked the end of the recession began in December 2007. The sharp run-up in equities since early March reflects these expectations have already been baked into the cake. The market is just now coming round to realize that consumer spending which comprises at least 70% of the U.S. economy, is not going to rebound anytime soon. Saturn in Virgo reflects that a reduction in the workforce cuts or reduces consumers’ ability to spend much beyond the basics needed for daily living. With Pluto (debt) in Saturn-ruled Capricorn until 2024, consumers will restrain excess spending to pare down or pay off their debt. Consumer spending will improve slowly over time but it will be with a “less is more/quality is better than quantity” mentality.

Venus (monetary value) entered Leo (gold) on August 26 until September 20. Since then, gold has risen over $50, with most of the gains occurring last week. After almost reaching $1,000 an ounce Thursday, September gold closed Friday at $994.60. Jewelry demand is down and scrap inventory is up, so buying comes down to fears of inflation or adverse events that cause the stock market to drop. Inflation has received little attention, but with interest rates nearly zero, there’s only one direction rates can go. With the Federal Reserve and other central banks as well as the G20 finance ministers making it clear that interest rates and special lending and stimulus programs established during the financial crisis are not going to go away anytime soon, many investors fear central banks will be too slow to react as the economy heats up.

Summary Of This Week’s Influences:
Labor Day is celebrated the first Monday in September when the Sun (self-identity) is in Virgo (workforce), creating a shortened work week.

Mercury, the planetary energy of communication and movement turns retrograde on Labor Day until September 29. Financial markets tend to get erratic during Mercury retrograde, and this period is exceptional.

Congress returns Tuesday from their August recess to face a very crowded legislative agenda that for the most part involves addressing established issues which is best suited for Mercury retrograde.

Wednesdays are ruled by Mercury, and President Obama will address a joint session of Congress to articulate his message for healthcare reform. With Mercury retrograde, it would be appropriate if President Obama keeps it simple by stating that healthcare reform will remove health insurance companies’ ability to reject you or your claim for any reason.

As Mercury turned retrograde at the beginning of the week, Pluto moves direct on the day of the Last Quarter Moon in Mercury-ruled Gemini.

Tuesday, September 8, 2009
Negative.

Wednesday, September 9, 2009
Choppy/mixed to negative trend bias starts improving in final two hours.

Thursday, September 10, 2009
Choppy/mixed to positive trend bias.

Friday, September 11, 2009
Volatile; could see large moves in either or both directions as the market’s sentiment is overdone. (Most likely to the downside.)

Pluto Goes Direct and Wall Street Reincarnates Securitizations To Profit From Death

Published by WallStreetWeather.net
When a planet is retrograde, the energies of that planet tend to be more internally focused. Pluto’s energies will be more pronounced this week as the planetary energy of debt, bonds, mortgages, insurance, taxes, all types of opaque financial products, death, wills and estates, is stationary* and will turn direct on September 11. Pluto has been retrograde since April 4.

An article in today’s New York Times (“Wall Street Pursues Profit in Bundles of Life Insurance”) describes how Wall Street has reincarnated the financial alchemy that created the financial crisis in the first place. With Pluto (death) in Capricorn the sign of the grim reaper, Wall Street believes it can transform the securitizations market by profiting from death.

Wall Street wants to buy the “life settlements” from policyholders who sell their life insurance policies for cash, securitize the policies and package them into bonds composed of diversified risks (heart disease, breast cancer, leukemia, diabetes, etc.) to sell to investors and pension funds who as the beneficiaries will receive a payout when the policyholders die. Unlike health insurers, the most profitable securitizations would be composed of policies of people in the worst health. The sooner the policyholders die, the bigger the profits. Healthcare reform is viewed negatively as expanded coverage and emphasis on preventative care could help people live longer. Perhaps they should create a credit default swap to protect the enormous downside risk in the event a cure is found for cancer, diabetes, etc.

As with subprime securitizations, Wall Street will profit from the packaging and trading even if these life insurance backed securities blow up for the investors. Just as banks bought subprime lenders, Credit Suisse (CS) acquired a company that originates life settlements. Goldman Sachs (GS) has set up a tradable index of life settlements so investors can speculate whether people will live longer than expected or die sooner than anticipated. (I suppose the next step will be for Wall Street to come up with ETFs that are ultra short or long “life expectancies” to increase the leverage.)

Pluto in Capricorn until 2024 reflects our rapidly aging population, as many of the baby boomers are now senior citizens. Pluto in Capricorn will transform how we view end of life issues and death. The fact that health reform opponents seized on an added Medicare benefit in H.R.3200 that was voluntary and would serve to help seniors formulate their personal choices and wishes for their final days on Earth demonstrates that during Pluto in Capricorn we as nation have a lot of lessons to learn when it comes to death and transformation and quality of life vs. quantity of life. Saturn represents government and with Saturn about to begin to form a challenging alignment to Pluto this autumn, government will pass restrictive regulations limiting what types of financial products Wall Street can sell to remove the barriers to transparency.

Seniors are not being forced to draw up living wills, but G20 finance ministers meeting in London yesterday agreed that the largest most systemically important global banks will have to draw up living wills detailing how their operations would be wound down if they became insolvent.

So far the “death panel” of Sarah Palin, Betsy McCaughey, and Glenn Beck has not ruled on the commerce of life and death.

*Planets do not really change direction, but appear to from Earth’s vantage point.

No disclosures.

Mercury Retrograde September 6-29, 2009 Reverses Financial Markets and Restarts Healthcare Reform

Published by WallStreetWeather.net
For three weeks about three to four times a year, Mercury appears to move backwards from Earth’s vantage point. Mercury turns retrograde September 7 at 12:45 AM EDT and will turn direct September 29 at 9:14 AM EDT.

Mercury rules all forms of communication and movement. Mercury retrograde is not considered a favorable time to make important decisions or start something new. However, Mercury retrograde does offer the opportunity to revisit situations we’ve overlooked, rectify past errors, and resolve issues that previously failed to reach fruition. Put the RE prefix before everything you do (rethink, reform, renegotiate, repair, revise, redo, reconnect, reinvent, retry, etc.) during this time. Reconfirm all appointments and arrangements and keep your schedule as flexible as possible to accommodate unexpected changes in plans.

All methods of communication can be prone to breakdowns and/or snafus during this time so it’s important to keep devices fully charged, frequently backup files, and have printouts of important documents. Scrutinize data and financial statements which could be more prone to errors. All forms of transportation can be more prone to breakdowns. Unsettled weather conditions can cause travel delays and cancellations, along with power outages.

As CNBC understands, Mercury retrograde tends to create choppy and volatile trading patterns as the market has a hard time making up its mind what the next move should be. Data feeds could be problematic and potentially display inaccurate information. Any discernable trading pattern begun during the retrograde period might not hold up once Mercury begins moving forward. The most volatile trading days during Mercury retrograde are likely to be around September 7 (U.S. markets closed)-8, 10-11, 15, 17-18, 22-23, 28-29.

From September 6 to 17 Mercury will retrograde in Venus-ruled Libra. (Mercury has been in Libra since August 25.) Relationships, particularly romantic partnerships as well as business alliances and partnerships, are emphasized now. Any relationship difficulties that arise during this time could stem from a lack of willingness to listen and understand the other person’s point of view. Libra is the sign of balance and fairness. Focus on working with what you can agree on (or at least respectfully agree to disagree). Since Mercury retrograde tends to bring back people and matters from the past, this can be a time to reconnect with past relationships and is an opportunity to repair any conflicts. Contracts and agreements could get revised or revoked now.

Mercury was last retrograde in Libra from September 24 to October 15, 2008, and Mercury turns retrograde on the same degree as the September 29, 2008 Libra New Moon. The financial system was in meltdown, with the DJIA dropping almost 800 points after the House failed to pass the TARP bill that day. Venus rules banks. By the end of last year’s Mercury retrograde in Libra, the Fed, Treasury, and FDIC decided which banks got partnered off and the biggest banks were forced to agree to take TARP.

One year later we still have not enacted reforms to address the root causes of the financial crisis. Mercury turning retrograde challenging the USA’s natal Jupiter indicates the nation will be grappling with big philosophical issues during this time.

As Congress returns from their summer recess, political alliances could change and sentiment could shift on financial regulatory and healthcare reform. 9 is the number of completion, fulfillment and attainment. On 09/09/09* President Obama will address a joint session of Congress to “relaunch” the Administration’s goals for healthcare reform, an issue left incomplete since 1965.

Libra is represented by the scales of justice, and the high court is represented by the ninth sign** of the zodiac. On 09/09/09, the nine justices of the Supreme Court will hold a special session to hear a re-argument to determine if the justices should overturn past rulings that upheld campaign finance laws limiting corporate spending in elections. Theodore Olson***, the former Bush Administration Solicitor General who argued Bush v. Gore before the Supreme Court, is the lead attorney for the conservative group Citizens United who lost its lawsuit against the Federal Election Commission to distribute “Hillary: The Movie” as a pay per view video last year.

Pluto represents deep and intense emotions as it brings events that are felt on a massive scale. The planetary energy of death and transformation, covert actions, and catastrophes has been retrograde since April 4 and will turn direct on September 11. Pluto rules panics and financial crashes, bankruptcies, mergers, mortgages, insurance, and the more opaque financial derivatives traded off the exchanges. Last year when Pluto turned direct the government put Fannie Mae (FNM) and Freddie Mac (FRE) into conservatorship. Pluto turning direct while Mercury is retrograde forces a re-examination of the issues related to these themes.

Wall Street was deeply impacted by 9/11, and almost collapsed under the banking panic last year. September 15 marks the one year anniversary that Lehman Brothers filed for bankruptcy, Bank of America (BAC) acquired Merrill Lynch, and the following day the government took a 79.9% stake in AIG. Mercury in Libra and Pluto in Capricorn form a challenging alignment (exact September 17) that could reveal new information regarding all of these issues, with the Federal Reserve coming under ever more scrutiny (particularly around September 11, 17, 22-23).

Equally meaningful to Pluto moving direct on September 11 is that Saturn in Virgo will oppose Uranus in Pisces for the third time on September 15. Saturn represents the status quo and the old ways of doing business vs. Uranus which breaks down barriers to bring reform. The first opposition took place on Election Day. Fear (Saturn) that the banks could not stand on their own was driving the call for stress testing, and the most ardent “free marketers” were advocating nationalization (Pisces rules communism) of the nation’s largest banks around the time of the second Saturn/Uranus opposition on February 5. Virgo rules healthcare, and with the opposition taking place just before the Virgo New Moon, healthcare reform has reached its make it or break it moment.

Mercury moves back into its “home” sign Virgo on September 17. Virgo rules the workforce, schedules/daily routines, and dietary matters. Reapply to employers who previously rejected you and get in touch with people you previously worked with. If you failed a test, retake it. Mercury retrograde in Virgo is a good time to sort through the paperwork and get organized.

Mercury will turn direct on September 29 at 9:14 AM EDT, revisiting where it was on August 17. Mercury conjoining the USA Neptune and President Obama’s Mars, and both challenging the USA Mars could bring an escalation in military action abroad.

The next Mercury retrograde will occur in Capricorn from December 26, 2009 to January 15, 2010. Retailers should be prepared for lots of returned merchandise.

The Weekly Forecast offers a more detailed view of planetary influences and their potential to effect the economy and the stock market.

Related Posts: “Stock Market Turbulence During The Leo New Moon Cycle,” “Eclipses and Other Planetary Pair Ups Will Bring Back The Bear Market By Autumn,” “Wall Street and the Consumer in Parallel Universes”

*999 is the UK’s emergency number just as 911 is in the U.S.

**Sagittarius

***Olson was born on September 11, 1940. His third wife Barbara was on board the plane that struck the Pentagon on 9/11.

No disclosures.