Monday will be the first trading day with Venus (money/banking/relationships) in its home sign Libra until September 8.* Together with the Sun (speculation) in its home sign Leo, these influences would tend to be favorable for the market.
But right now Venus in Libra’s charm is under stress from Uranus (August 7), Saturn (August 8), Jupiter (August 9), and Pluto (August 10) at the same time these planets are making challenging alignments to each other at the beginning of cardinal (initiating) signs. On Wednesday Venus will square the June 26 Capricorn Lunar Eclipse that brought all these planetary energies together and saw the market decline to the lowest level this year going into the July 4 holiday weekend. Then on Friday the Moon will conjoin Venus and Mars in Libra as the planetary pair conjoin (August 20) for first time since September 2008 as Jupiter opposes Saturn (August 16) and Saturn squares Pluto (August 21), which could spark another selloff leading to new 2010 lows.
New Moons equate to a new beginning. The Leo New Moon occurs on August 9 at 11:08 PM EDT at the time the Moon is the closest to the Earth (perigee) this month. In addition to raising the potential for increased geophysical and geopolitical phenomena, the Leo New Moon could likely bring a shift in speculative strategies.
The big market melodrama centers around Tuesday at 2:15 PM EDT when the Federal Open Market Committee releases their announcement on monetary policy.
The closer we get closer to the exact alignments involving the major economic indicators Jupiter (expansion/inflation/greed) and Saturn (contraction/deflation/fear) opposing each other August 16 and Saturn squaring Pluto in Capricorn (government debt) August 21, the higher expectations have become that the Fed will provide an indication of some type of increased support to the economy.
Saturn is the more dominant player now due to its simultaneously dual alignments which are enhanced with Pluto in Saturn-ruled Capricorn. Saturn’s strong influence works on Jupiter by exaggerating the fear that economic conditions are contracting which could lead to a double dip recession even though Jupiter opposite Saturn reflects economic growth (Jupiter) is uneven (opposition) and occurring at a slow and moderate pace (Saturn). Fear as well as fear intimidation by those factions who are profiting from Fed policy is at its zenith this month but will gradually subside by mid autumn.
Saturn dominant now also reflects that deflation has become a bigger problem than inflation.
Many market pundits have turned into deflationistas solely on the basis that the M3 money supply is shrinking due to the low velocity of money and the lack of lending by financial institutions. The Fed ended quantitative easing (purchasing Treasuries, agency debt and MBS) in March as banks were recirculating the liquidity back to the Fed’s balance sheet as excess reserves. Bernanke has said that banks are not lending due to reduced collateral value of small and medium sized businesses. Translation: small businesses have no equity left in their personal residences to back business loans, regardless of the profitability or cash flow of those businesses.
Quantitative easing (QE) didn’t work before since all the money ended up back at the Fed, so why would it work now? My posts on “Bernanke Tells Wall Street The Fed’s Hands Are Tied” and “Bullard’s Bipolar Fed Strategy” explain why additional QE would damage the plumbing (Pluto) of the financial system.
Any type of stimulative policy emanating from the Fed now could result in China, Japan, and other foreign buyers (Jupiter) reducing (Saturn) purchases of US debt and mortgage securities (Pluto). China’s captive rating agency has already lowered the credit rating on US debt from AAA to AA citing the federal deficit. More QE would show the rest of the world whose central banks and governments have already embarked on monetary and/or fiscal tightening, that the US lacks the discipline (Saturn) to manage its currency and keep its fiscal house in order.
Savers are already subsidizing low interest rates for individual and corporate borrowers. Since the public views QE as the Fed “printing money,” further moves in this direction will scare the public into thinking the dollar will become worthless. Once the velocity of money begins increasing, the Fed’s ability to contract the money supply will be even more difficult.
The market’s interpretation of Jupiter in Aries opposing Saturn in Libra and squaring Pluto in Capricorn is that the Fed compromise by purchasing new mortgage and/or Treasuries by using the cash from maturing bonds to maintain a steady balance. Investors have pushed Treasury yields down to rates not seen since the height of the financial crisis and even well before that on the bet the Fed will return to QE and/or further elaborate in Tuesday’s FOMC statement what “extended period” means. Despite all the fear, stocks and commodities are holding up in anticipation that further monetary stimulus will push stocks, commodities, and other riskier assets higher.
If businesses are afraid to expand their businesses and hire additional workers and consumers are reluctant to spend, further QE and an extension of the “extended period” of near zero interest rates will likely have the opposite effect as they will interpret the Fed’s message to mean that economic conditions are worse than during the height of the financial crisis!
Although Jupiter opposite Saturn and Saturn square Pluto are in the waning phase of their cycles, they are occurring at the beginning of cardinal (initiating) signs which signifies the transition from the old to the new. Pluto opposing the USA Venus at the same time Venus squares Pluto can indicate that concerns about US sovereign debt becomes the catalyst leading to a decline.
The challenging alignments of Jupiter, Saturn, Uranus, and Pluto at the beginning degrees of cardinal signs are impacting the Fed’s natal Sun in Capricorn (self-identity/the Chairman), opposing natal Pluto in Cancer (debt; undisclosed financial arrangements), and Aries Midheaven (the sign ruling the sector of the chart representing its reputation).
The motto for Uranus is “expect the unexpected.” Uranus at the beginning of Aries is squaring the Fed’s natal Pluto exactly to the minute! Doing what the market wants the Fed to do would not reflect the planetary influences I’ve described since it would not be a surprise or something new.
Uranus represents freedom and independence. As I described in my post on Jupiter opposite Saturn (see link above), the Fed’s independence was on the line in 1951 when Jupiter and Saturn were in opposition. If the Fed does what the market is demanding, its credibility will be destroyed as the public will know without a doubt that the Fed is controlled by Wall St. and PIMCO.
If the Fed really wants to get the economy moving, dropping the “extended period” would create expectations that interest rates will be rising sooner rather than later and generate optimism that the economy is truly on the road to recovery which will in turn spur growth. And prevent the US from emulating Japan.
Monday, August 9, 2010
Negative bias; improves at the close.
Tuesday, August 10, 2010
Wednesday, August 11, 2010
Negative conditions turnaround in afternoon; closes positive.
Thursday, August 12, 2010
Swings from negative to choppy/mixed to moderately positive.
Friday, August 13, 2010
Shocks and intraday reversals are more likely today with Uranus back at zero degrees Aries before shifting back into Pisces late this evening until March 11; closes negative.
*Venus will return to Libra November 7-29 due to Venus retrograde October 8 to November 18.