WallStreetWeather.net Forecast For Week Of January 4, 2010
Summary Of Last Week’s Influences:
There is a strong correlation when a transiting planet in a cardinal sign* aspects the Federal Reserve’s Sun in Capricorn opposite Pluto in Cancer that some type of action will emanate from the nation’s central bank.
On December 28 the first business day that Venus (banking) in Capricorn (government) conjoined the Fed’s Sun, the Fed announced its proposal to offer term deposits for under one year to banks at a rate “not to exceed the general level of short-term interest rates” as part of the Fed’s exit strategy to drain some of the more than $1 trillion in excess reserves from the financial system.
This proposal is meaningless considering that since the amendment to Regulation D on October 9, 2008, the Fed is already paying banks 0.25% interest on reserve balances and excess reserves held at the Fed. Banks taking out term deposits with the Fed could not withdraw the money before maturity, but the Fed would allow the bank to use its term deposit as collateral at the Fed’s discount window. Meanwhile consumers have to commit to a CD with a 6+ month term to get 0.25% interest at Chase! (I picked JPMorgan Chase’s CD rates since chief executive Jamie Dimon has publicly complained about the Obama Administration’s proposal to create a Consumer Financial Protection Agency.) This is yet another example of how Fed policy is anti-consumer.
The term deposit proposal is just another phony attempt by Fed Chairman Bernanke to prove to naysayers that he has the tools and willpower necessary to rein in excess liquidity before inflation takes off. Yet what Bernanke said in a speech today on “Monetary Policy and the Housing Bubble” before the American Economic Association should be sufficient for the Senate to reject his reappointment as Chairman.
Bernanke said the housing bubble was caused by regulatory failure, not loose monetary policy. And whose job is it to regulate the banks? The FED! Why should someone who admits he wasn’t doing his job properly be reappointed?! As I wrote in a previous post, this speech is yet another example of Bernanke defending the policies and plagiarizing the excuses of Alan Greenspan related to excess foreign savings bleeding in the U.S.
What the Fed refuses to admit is that ridiculously low interest rates promote loose lending and excess speculation. Meaningful financial reform cannot happen unless the Fed charters a different course. This is not going to happen with Ben Bernanke at the helm as the Fed does not take economic behavior into account. Using inflation alone to justify low interest rates leads to repeated boom and bust cycles and the associated pain.
Venus conjoining Pluto in Capricorn Monday and the Moon (sentiment) in Venus-ruled Taurus reflected the weakness in the financial sector due to rising Treasury yields and concerns that eventually the Fed will contract liquidity.
The S&P 500 reached a new 2009 closing and intraday high on Monday while the Dow and Nasdaq made their closing highs for the year on Tuesday and intraday year highs on Wednesday. As I described in last week’s Forecast, the stock market had a dramatic run up from the March 9 12 year low. The Dow’s best month was July (+8.6%) when Jupiter (optimism) conjoined Neptune (euphoria) for the second time which coincided with earnings season. Yet from a longer term perspective, the Dow has declined 24% over the last decade. So much for the “buy and hold” mantra! A new decade needs a new mantra along the lines of figure out your price points, then buy and sell using limit orders.
Summary Of This Week’s Influences:
The Moon represents the general public and emotional sentiment. Mondays are ruled by the Moon, and tomorrow Jupiter in Aquarius will conjoin the USA Moon for the first time since January 1998. But don’t expect this event to usher in another cycle of conspicuous consumption.
I’d like to thank a reader of this blog who emailed me a link to an article in today’s New York Times (“In Recession, Americans Doing More, Buying Less”). The article perfectly describes how Pluto’s entrance into Capricorn in 2008 began transforming how Americans spend their discretionary income and time. Pluto brings transformational change whether we are ready for it not and with Saturn in Virgo then, the changes first began as a result of people losing their jobs or having a contraction in their working hours.
The New York Times/CBS News poll was taken November 6-8, 2009 when the Moon was in its “home” sign Cancer, ruler of food and family. On November 8, the Moon moved into Leo which rules leisure activities. Most importantly, Saturn in Libra was about to make its first square to Pluto at the same time both of these planets are impacting the USA’s natal Venus in Cancer, reflecting that the public’s values are undergoing a profound shift spanning all income brackets. Nearly half of the Americans surveyed said they were spending less time buying nonessentials and more than half said they are spending less money in stores and online.
Economists worry that “experience consumption” – enjoying cultural and recreational activities as well as practical activities such as cooking from scratch – has ushered in the end of the spendthrift era of Pluto in Jupiter-ruled Sagittarius (1995-2008) and will undermine an economic recovery.
What this means is that while the public has become grounded in simpler tastes and values, the government and particularly the Federal Reserve doesn’t understand the planetary writing on the wall. Since consumer spending comprises 70% of the U.S. economy, a new paradigm in economic planning is required ASAP.
2010 begins with Mercury retrograde in Capricorn until January 15 and Mars retrograde in Leo until March 10. The first quarter of the year will be a time to take action on outstanding issues that have not been resolved. And if we think they have, circumstances will arise that remind us otherwise!
Mercury is the most dominant planetary energy this week as it conjoins the Sun on Monday and Venus early Tuesday during the time the Moon is in Mercury-ruled Virgo. This is an excellent time to review finances and work-related matters to formulate goals for 2010.
Mercury retrograde tends to bring choppy or “see-saw” trading, making it difficult to discern where the market is going. As I wrote in the Mars retrograde and more recent posts, the influence of Saturn square Pluto and other factors later in January/February could bring a market correction.
Monday, January 4, 2010
The Sun conjoining Mercury tends to be either bullish or bearish but has a greater tendency to be bearish when Mercury is retrograde. The Sun conjunct Mercury in Capricorn can bring news about sovereign debt or concerns about central bank policy that cause investors to worry (Moon in Virgo). However, Mercury conjoining Venus is the feel good factor; news tends to be positively interpreted. Combined with Jupiter conjoining the USA Moon, I would say that today has a positive bias but the market could turn negative intraday and/or weaken in the afternoon.
Happy Birthday, Mom!
Tuesday, January 5, 2010
Positive bias, especially in the morning. Could weaken and turn negative into the close.
Wednesday, January 6, 2010
Thursday, January 7, 2010
Positive but weakens in the afternoon with indices mixed between moderately negative and moderately positive.
Friday, January 8, 2010
Negative, but indices could be mixed to positive intraday.
*The cardinal signs are Aries, Libra, and Capricorn.
**The Fed’s Aries Midheaven (reputation)
Federal Reserve: December 23, 1913 6:02 PM EST Washington, DC
USA: July 4, 1776 5:10 PM Philadelphia, PA
CORRECTION (added 1/4/10 at 8:05 AM): I incorrectly stated that the Dow declined 24% over the last decade. The S&P500 declined 24%, and the Dow declined 9.3% from 1999-2009.
Posted 1/03/2010 08:31:00 PM