Will Bernanke Ignore Rising Shoe Prices Too?

Forget Iron Man and Superman. A new super hero has emerged; spawn of the creature from Jekyll Island –Fed Chairman Ben Bernanke!

How is the Fed Chairman a super hero? On the basis that he doesn’t need to eat or drive, and inflation is able to disappear in his presence, I’d say he’s got strong qualifications. The final test for our potential superhero will be if he can survive without shoes.

The Wall Street Journal “Pain at the Other Pump: Shoe Prices Rise” reports that America’s three largest footwear makers – Brown Shoe Co. (BWS), Collective Brands (PSS), and Jones Apparel Group (JNY), are increasing shoe prices between 5-15% beginning this fall. The companies cite a weak US dollar and higher costs in China for the price increases.
We understand about the weak dollar. After all, Ben’s been busy since last August with the rate cuts. As Papa Bush would say, “wouldn’t be prudent” not to help the banks and US multinational corporations.

The China part is another story. We were told if everything was made in China we would save, save, save. Greed, er globalization is good. China makes 85% of the shoes sold in the US, as well as most of the handbags, belts and other leather accessories (which will also increase). Ben doesn’t need a handbag, so that’s not an issue.

Shoes fall under the planetary energy of Neptune and the sign Pisces which rule the feet. Uranus, the planetary energy relating to sharp price movements, is currently in Pisces. This fall, Uranus in Pisces will begin forming a series of oppositions to Saturn in Virgo until mid 2010. Prices on all kinds of goods could gyrate wildly. In the case of shoes, there could be disruptions along the supply chain.

Jones Apparel CEO Wes Card must be a Bernanke groupie. The maker of Nine West brand shoes told the Journal that despite price increases, consumers will see good value, not inflation. “The gap between a Nine West shoe and a Jimmy Choo has gotten wider,” Card said. If it wasn’t for “Sex and the City,” only celebrities and fashionistas would know what a Jimmy Choo is. Pictured above is a new Nine West pump style shoe that retails for $89.00. A similar style Jimmy Choo shoe retails for about $710.00. Didn’t Mr. Card learn that you must compare apples to apples and not apples to caviar?

Another Fed fan is Mark Hood, the CFO of Brown Shoe Co. which owns the Famous Footwear chain and brands such as Naturalizer, Life Stride and Buster Brown. Hood says that they would ease feet and wallets “by adding features such as breathable linings and cushioned in-steps.” Rationalizing higher prices because of added features is known as hedonic adjustment – a fancy way of discounting inflation. The Bureau of Labor Statistics will proclaim that consumers got more for their money. Therefore, the manufacturer’s higher price is not inflationary.

People need to buy shoes to protect their feet, but they don’t need to buy as many. When it comes to the more trendy high heeled shoes, women need to calculate the cost of a podiatrist visit into their shoe budget.

Bernanke told the banks to “raise capital or be acquired.” Now he’s adjusted the message that shoe companies must “raise prices or be acquired.” After all, superheroes can always go barefoot.

Related Post: “March CPI: Desperate Housewives Want to Know Where the Government Shops”

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Financial Markets, Oil & Planetary Role Reversal

“Wall Street’s budding optimism confronted reality during the week. Reality won.” – Wall Street Journal: “Optimism Suffers Setback as Dow Drops for the Week”

This is accurate description of what happened when Jupiter moved stationary retrograde* in Capricorn, a sign ruled by Saturn. During the prior week when Saturn went stationary direct in Virgo, markets moved up. When planets are about to change direction, their characteristics become magnified. On the surface, it appeared that financial markets interpreted the Saturn and Jupiter stations in the opposite manner than is most commonly ascribed to these planetary energies. However, a closer examination reveals Wall Street did indeed follow planetary patterns.

Saturn is the planetary energy of caution and limitation. Virgo rules the workforce. The April employment report showed a loss of 20,000 jobs, far less than Wall Street expected. This combined with other indicators led many investors to believe we had reached the bottom and it was time for financial markets to begin their climb to the top. (Saturn relates to putting in the effort required to climb to the top of the mountain or the top of one’s profession.)

Jupiter is the planetary energy of optimism and expansion; it tends to manifest in upward market moves. And the market did see large gains – in oil. The stock market got spooked on Friday by Dow component American International Group’s (AIG) $7.8 billion loss and plan to raise $12.5 billion in capital. Jupiter is constrained transiting Capricorn this year as Capricorn is a sign ruled by Saturn. The upward spiral of inflation puts limits (Saturn) on growth (Jupiter). As the planetary energy of excess, Jupiter can make large moves in either direction.

Oil’s record high close of $125.96 Friday was another factor in dampening the market’s enthusiasm. Oil is ruled by Neptune and the sign Pisces. Uranus, the planet of shocks, surprises, and speculative trends, has been in Pisces since 2003. In financial markets, Uranus relates to price spikes. Goldman Sachs (GS) expanded their 2005 bullish oil forecast this week to predicting a “super spike” of $150-200 a barrel over the next 6 to 24 months. Prices for oil futures to be delivered up to December 2016 are trading above $110 a barrel. (Uranus rules uranium, which sold for around $10 a pound in 2003 and now is at about $65 a pound on renewed interest in nuclear power.)

Jupiter is making three aspects to Uranus this year, a sign of large and unusual price moves. The first pass occurred on March 28, around two weeks after oil hit a then record high. Stocks declined leading up to that day, and had a mega short covering rally April 1. May 21 marks the second pass. The Moon will be in Sagittarius again, the sign ruled by Jupiter. The final hookup of Jupiter and Uranus will occur on November 13. There will be a Full Moon in Taurus that is perigee (closest to the Earth). The Full Moon will challenge Neptune that day. Besides higher than average tides and strong storms likely around that time, inflation will probably be in the spotlight.

There is no doubt that oil and other commodities are in a bubble. Unlike the era of Uranus in Aquarius (1996-2003) that saw any company’s stock skyrocket and then crash if it had dot com in its name, high oil and commodities prices are also based on supply constraints and demand from emerging markets. Investors will have to draw their own conclusions as to how much oil is worth after speculation and inflation is removed. With Uranus, one thing is certain. The downward spikes will be just as swift and surprising as the upward ones.

*Planets do not really move backwards but appear to from Earth’s vantage point.

Related Posts: “Factors Fueling Oil Prices”, “Satellite Searching for Saudi Oil”
“Oil and Election Year Politics”, “The Commodities Craze”

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James Bond is Back at the Bookstore

May 28, 2008 marks the centenary of Ian Fleming’s birth. The creator of the most famous secret agent of all time, James Bond, will be celebrated with reprints of his books, along with a new 007 adventure.

The Wall Street Journal reports that Pearson PLC in the UK (PSON.L/PSO) and Doubleday (part of Bertelsmann AG) in the US, are gearing up for a massive marketing campaign to promote “Devil May Care” by British author Sebastian Faulks. Very little is known about the book except that it will take place in the 1960s to continue where Fleming left off. (Ian Fleming died in 1964. His last Bond novel was “The Man with the Golden Gun”, published in 1965. “Octopussy” and “The Living Daylights” are two short stories Fleming wrote in the early sixties but were published as one book in 1966.)

Since his death, Fleming’s estate has commissioned other authors besides Faulks to continue his literary legacy: Kingsley Amis (“Robert Markham”), John Gardner, and Raymond Benson. For the most part, these books had tepid sales. However, the publishers and bookseller Barnes & Noble (BKS) believes this time is different. Pearson will give “Devil May Care” the largest fiction budget for a UK book this year. Doubleday will have an initial print run of 250,000. The publisher believes that the success of the 2006 film “Casino Royale” will do for the Bond books what “The Bourne Identity” films did to revive Robert Ludlum’s novels and the authors who pen them under Ludlum’s name. Bob Wietrak, B&N’s VP of merchandising says the bookseller is buying “Devil May Care” as “a definite best seller. The downturn in the economy has prompted a demand for escapist fare.”

May 28, 2008 will feature two prominent planetary energies that just might provide the sales the publishers and bookstores are hoping for. Mercury, the planet that rules writing and books, will be retrograde* in Gemini. People will be more inclined at that time to read a book featuring a well known character, or want to reread favorite books from the past. Readers would also be more interested to read a book that takes place in a different time (such as the Cold War era). The Sun and Venus are conjoined in Gemini, which will boost book sales in general at this time. (I’m sure the Bond books will be promoted as gifts for Dads and grads.)

Ian Fleming called his Bond stories “fantasy for grown-ups”**. Neptune, the planetary energy relating to fantasy and escapism, will also turn retrograde then. The Moon (emotional needs) will be in Neptune-ruled Pisces on May 28. Espionage falls under the domain of Neptune/Pisces.

Jupiter rules publishing. With Jupiter in Capricorn, the sign of limitation, net adult hardcover sales in January and February 2008 fell 13% year over year, according to the Association of American Publishers. Jupiter in Capricorn means publishers this year want to play it safe with established authors and fictional characters. Capricorn rules traditions and the past; Britain is a Capricorn nation.

Gemini is a dualistic sign, symbolized by the twins. There are two James Bonds – the book Bond and the movie Bond. And there are two types of Bond books – Fleming’s and the authors writing books after his death. The book industry would like to accommodate both.

*Planets do not really move backwards but appear to from Earth’s vantage point.

**”Chitty Chitty Bang Bang” is Fleming’s fantasy for children.

Related Post: “Islamic bonds rescue James Bond’s favorite car”

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The Stimulus Will Not Raise Sales

This morning President Bush was willing to concede that “it’s obvious our economy is in a slowdown”. This is probably the closest the Administration will come to admitting the US economy is in a recession.

But fear not, the economic stimulus checks are on their way! “Eligible” people will begin to receive their gift from the government beginning May 2, depending on when they filed their 2007 tax return and the last two digits of their Social Security number.

To help fulfill the government’s objective to get citizens to splurge, retailers are preparing special sales and promotions between May and July. According to USA Today, many retailers will offer discounts on certain types of merchandise or no interest financing. Wal-Mart (WMT) will announce their stimulus specials next week.

In an effort to ensure they get all your stimulus money (and perhaps a bit extra), some retailers will exchange your stimulus check for a store gift card with a bonus amount added. Sears/Kmart (SHLD) will add 10% to a check amount exchanged for a gift card. Grocery chains Kroger (KR) and Supervalu (SVU), will add $30 to every $300 of stimulus money.

And just in time for summer vacation season, the travel industry is salivating for the stimulus money too. Economist Stephen Morse, director of the Tourism Institute at the University of Tennessee, believes people will feel they “deserve to get away.”

What Morse, many on Wall Street, and the politicians fail to grasp is that the dynamics are far different than they were when stimulus checks went out in 2001. Inflation wasn’t running rampant, debt wasn’t climbing into the stratosphere, and most people wouldn’t use the term “negative amortization” to describe their home. A large SUV will consume half a stimulus check to fill up its tank.

And the timing couldn’t be worse. Saturn, the planet of economic contraction and caution, will be moving direct* May 2. When a planet appears to be stationary in the sky, the energies it represents are extra strong. Saturn’s rings physically symbolize that people must not spend beyond their means. Saturn in Virgo reinforces extra income received will be spent on items required for daily living, such as groceries and gas. Virgo is the sign of the bookkeeper, so stimulus money will also go to pay bills and pay down debt. While the IRS will distribute the money from early May to mid-July, the energies surrounding the beginning of the stimulus program matter the most.

*Saturn went retrograde December 19, 2007. Planets do not really move backwards, but appear to from Earth’s vantage point.

Related Post: “Healthy Stimulus”

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A Run on the Rice

A food crisis has developed in certain parts of world, part of the fallout from the US financial crisis that panicked the Federal Reserve to lower interest rates too far. We’ve went from a run on the bank (Northern Rock), an investment bank (Bear Stearns), to a run on the rice.

As I predicted last summer, the transit of Saturn in Virgo to mid-2010 is causing limited supplies (Saturn) of food staples (Virgo). Mars in Cancer has elevated food prices such as rice to record highs that violence has broke out in countries such as Haiti and Bangladesh. Jupiter in Capricorn reflects governments such as the Philippines buying rice in an effort to keep prices lower for their citizens. Several nations (China, Cambodia, Egypt, India, and Vietnam), have imposed export restrictions on rice and other staples. While the governments (Capricorn) have benign intentions (Jupiter), it has had the opposite effect. With Pluto in Capricorn, world leaders know from history the consequences of governments who did nothing while their citizens suffered and starved.

The situation has gotten worse with Venus in Aries from April 6 - 30. Venus rules asset values. In Aries, a sign ruled by Mars, it has strengthened the influence of Mars in Cancer’s elevation of food prices and concern over food supplies. Cancer rules food along with what makes us feel secure. If you don’t have anything to eat or even the perception there might not be enough to eat, panic ensues. Since Cancer is ruled by the Moon, this is a primal emotional response.

With Venus and Mars challenging Jupiter yesterday and today respectively, US rice futures closed yesterday at a record $24.82 per hundredweight. (The US is the world’s fourth largest exporter of rice.) The global benchmark, Thai 100% B grade white rice, hit above $1,000 a ton today on continued buying pressure from number one importer the Philippines.

The media have had a field day talking about limits on rice and other food staples at Costco (COST) and Sam’s Club (WMT). In some parts of the US, people are stockpiling basmati and jasmine rice. According to today’s Wall Street Journal, Costco has rice limits in selected stores. There is a limit on flour and soybean oil purchases (four 35 lb. containers – attention weight lifters!) at its Queens, New York store. Sam’s Club has limits of four 20 lb bags of rice per visit. Why the average family needs to buy 80lbs of rice is beyond me! I buy a 2 lb bag of brown rice every two weeks to feed two adults two to three servings per week.

While it’s always a smart idea to maintain a well stocked kitchen, this is obviously hoarding. America with its Sun (self-identity), Mercury (thoughts), Venus (desires/values), and Jupiter (abundance) in Cancer, is a nation of hoarders. The pack rat problem is further exasperated by the fact that the US is a Jupiter-ruled nation. Warehouse clubs such as Costco and Sam’s Club brilliantly feed into the national psyche that “bigger is better.” If food and other grocery goods are available in huge sizes sold in a warehouse environment, it must be a bargain. When you calculate the cost of membership, the (usually) extra gas cost to drive to their location, the fact you must buy in bulk, and your weighted down vehicle further erodes fuel efficiency, I fail to see the savings. To me, the best shopping strategy is to buy non perishable items from sale to sale, and look at the per ounce cost of an item in various sizes as the biggest size is not necessarily the cheapest.

Related Post: “The Commodities Craze”

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Male Hormones Blamed for Stock Market Bubbles and Crashes

Men have endlessly enjoyed making nasty remarks about women’s hormonal cycles. But a study out today concludes that male traders are to blame for stock market bubbles and their subsequent crashes. The findings published in Proceedings of the National Academy of Sciences
recommend that “you could stabilize financial markets by hiring more women and older men.”

Cambridge University researchers Joe Herbert and John Coates (who in his prior career ran Deutsche Bank’s New York trading desk), studied the testosterone levels of 17 London traders for eight consecutive business days. As Coates writes in a Financial Times article, “the higher a trader’s morning testosterone, the more money he made that day. This effect was most pronounced in experienced traders.” From the study, Coates associated elevated testosterone with creating a “positive feedback loop” that increases confidence and the risk-taking that leads to market bubbles. The FT reports that a trader sued the hedge fund he was working for last October for allegedly forcing him to take female hormones to calm down his aggressive behavior. Higher levels of the stress hormone cortisol (especially in experienced traders), “correlated with higher levels of implied volatility in the options market.” Coates believes that in the current financial climate, “traders exposed for months now to the noxious effects of cortisol, may end up in a psychological state known as ‘learnt helplessness’. As a result they may become price insensitive, blunting the instruments of monetary policy.”

Coates advocates neuroscience and endocrinology to help economists develop a more accurate model of risk. The endocrine glands of the body come under the overall rulership of Mars, the planetary energy of action and aggression. While the energies of Mars and the Sun (ego/identity) strongly relate to men, these energies are just as important in women’s horoscopes.

The energies of Venus and the Moon particularly resonate with women, but likewise are important in men’s horoscopes. As readers of my Weekly Forecast know, the Moon and the relationships it forms to other planets, most strongly represents the current emotional barometer. Venus rules banking and asset values, so as a broad generalization, women could generate more profits because they might be better equipped to judge current and future value of a financial instrument. As a woman, I absolutely agree with the study’s suggestion of hiring more women traders to balance out of control male energies. However, it is important that both sexes balance the male and female energies of their horoscopes.

If you want to better stabilize the markets, the best way is to look at past and future long term cycles of the planets Jupiter through Pluto. As I’ve written so many times, the government and especially the Federal Reserve, needs to understand these planetary cycles to chart the appropriate course of economic and monetary policy.

What I find encouraging about this study is that science is really coming around to examining more esoteric factors they would previously dismiss as being without merit to warrant investigation. I am firmly convinced that science will prove the “as above, so below” principle once and for all in the not too distant future.

Related Post: “Stocks Lost Decade from a Planetary Perspective” (See the Cycles section for more posts.)

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Islamic bonds rescue James Bond’s favorite car

“Bond had been offered the Aston Martin or a Jaguar 3.4. He had taken the D.B.III. Either of the cars would have suited his cover – a well-to-do, rather adventurous young man with a taste for the good, the fast things of life. But the D.B.III had the advantage of an up-to-date triptyque, an inconspicuous colour – battleship grey – and certain extras which might or might not come in handy.” -- from “Goldfinger” by Ian Fleming

It was fitting that Ian Fleming created a cover for James Bond as a businessman working for Universal Export. Both Fleming’s books and the films they inspired are enjoyed throughout the world.

As today’s Financial Times points out (“Sharia funding with Bond link earns licence to thrill”), the UK has become the biggest importer of Islamic finance, and the only EU country to have licensed Islamic banks. Ford’s sale of Aston Martin in March 2007 to a UK-led consortium was backed by Kuwaiti companies Investment Dar and Adeem Investment.

The investment was funded by Sharia-compliant finance. Investors are paid profits or rent rather than interest. (Islam forbids charging interest on loans as it is seen as a form of usury.) With the spike in crude oil since Uranus (sharp price spikes) entered Pisces (oil) in 2003, Moody’s estimates Islamic banking assets to be $500 billion. Despite the geopolitical situation, financial companies at least on the other side of the pond are eager to profit from Islamic investment. With the profits of US financial institutions suffering under the weight of asset-backed security risks, there may be a sea change in attitude toward creating sharia-compliant finance here.

Bond will drive a DBS in “Quantum of Solace”*, the new 007 film scheduled to be released in the US on November 7, 2008. At this point in time, I would prefer that Bond drive a Tesla. I am sure it could be modified to suit his needs.

* “Quantum of Solace” is a short story that is part of Fleming’s Bond novel, “For Your Eyes Only.”

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Bear Stearns' Easter Basket

It seems that the parties involved in JPMorgan’s (JPM) takeover of Bear Stearns (BSC) like to work on the deal on holidays, Sundays, and when the Moon is Void-of-Course.*

Here’s the bear facts about the “amended” deal between JPM and BSC. If The Wall Street Journal timeline is accurate, Bear’s Board of Directors couldn’t possibly have fully read the deal before agreeing to it, since CNBC announced it was approved just after the market opened this morning.

JPM raised its offer to BSC shareholders from $2 to $10 a share. (BSC shareholders will exchange 0.21753 shares of BSC stock for JPM stock.) I’m sure investor Joe Lewis, who owns 12 million shares at an average price of $104 ($1.26 billion), is overjoyed at JPM’s generous new offer.

Bear will offer 95 million newly issued shares of its common stock (39.5% of shares outstanding) for JPM to purchase at $10 a share. New York Stock Exchange rules normally require shareholder approval of shares that are convertible into more than 20% of a company’s shares. However, JPM got the NYSE to grant an exception under their rule that a delay would “seriously jeopardize the financial viability of the listed company.” The closing of the share sale is expected to be completed by April 8, 2008. These shares should not be issued with voting rights. JPM is basically buying votes FOR FREE! Once the deal goes through, Bear’s coffers become the property of JPM.

Bear’s Board of Directors is on board to approve the merger. Bear CEO Alan Schwartz said: “The share issuance to JPM was a necessary condition to obtain the full set of amended terms, which in turn, were essential to maintaining BSC’s financial stability.” But Alan, you and the other Bear executives emphatically told the world as late as the 12:30 PM March 14 conference call that with the Fed’s 28 day loan, everything would be fine. One wonders what Bear’s board was secretly promised to buy their vote. Perhaps taking $10/share is worth it to be indemnified against shareholder lawsuits.

In a statement released this morning, the New York Federal Reserve said that upon the closing of the merger it will provide $29 billion in term financing to facilitate JPM’s acquisition of Bear at the Fed’s discount rate (2.5%). Investment management firm BlackRock (BLK) will manage the portfolio. If Bear’s $30 billion valued assets (as of 3/14/08) lose value, JPM will bear the first $1 billion of losses. Any realized gains in the portfolio will accrue to the New York Fed.

The Fed statement also said that “This action is being taken by the Federal Reserve, with the support of the Treasury Department, to bolster market liquidity and promote orderly market functioning.” In the past week it has become quite clear that both the Fed and the Treasury knew on March 14 that the temporary loan was a ruse to keep the market calm so a scheme could be prepared over the weekend. Or as Treasury secretary Paulson said, “before Asia opened” on March 17.

Last week several media outlets were sounding very metaphysical in describing Bear’s situation. From Bear’s “near death experience” (Financial Times) to Bear’s “karma” (Wall Street Journal), it was all very plutonian – relating to Pluto, the planet ruling death and resurrection (reincarnation). With Pluto in Capricorn, the sign of the government and high finance, you would expect all kinds of secret shenanigans to take place to manipulate a sad situation into someone else’s gain.

This winding road leads to the Treasury secretary’s doorstep. Paulson wants to burnish Bear’s karma in front of the world, as Bear was the only investment bank who refused to bail out hedge fund Long Term Capital Management in 1998. The karma of Paulson, the White House, and the Fed is entwined in hypocrisy when other investment banks have lending facilities previously only available to the major banks, but are exempt from their rules. Now that the Fed has stretched their financial jurisdiction beyond its limits, “moral hazard” has come full swing back to its source.

*When the Moon (our emotional barometer) does not form any relationship to a planet before entering a new zodiacal sign. This time period is best suited for anything where NO ACTION OR OUTCOME is desired, as actions taken during the VOC period may not turn out as planned.

Related Posts: “JPMorgan’s Bogus Bear Deal” and “Bear Stearns: The Bare Facts”

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“Survivor’s Euphoria” Causes Stock Market Rally

Yesterday’s mega rally was described as “survivor’s euphoria” by Bill O’Donnell, a strategist at UBS. As stated in my Vernal Equinox post, “stock market volatility gyrates from hope and euphoria to massive panic, with sentiment highly influenced by rumors and ‘happy talk’ from the Federal Reserve and the Bush administration.” With the Moon in Virgo today, let’s dissect some of the key drivers of yesterday’s market.

In my Weekly Forecast for March 18, I predicted that the market was “likely to be down on reports of further write downs projected or to be taken.” My forecast was based on the alignment of Mercury and Mars. This represents news that investors sharply react to. Due to Mars retrograding in Cancer, this aspect previously occurred on November 19, 2007. Markets were sharply down that day after a Goldman Sachs (GS) report forecast the financials face $48 billion in write downs by the end of 2008. Citigroup (C) forecast a $22 billion write off split between $11 billion in the fourth quarter of 2007, and the other half taken in 2008. The difference then was Mercury (news) was in Scorpio, the sign of debt/lending. Mercury is now in Pisces. Mercury in this sign brings news of rumors, deceit, hope, and euphoria – whether real or imagined. One factor I covered up by stupidly sticking a post-it note on top of my chart, was Mercury harmonizing with the USA Jupiter in Cancer yesterday. Unless overruled by other factors, this usually creates an up market, as Jupiter creates big moves resulting from overblown reactions to market happenings.

The indices opened strong, with the DJIA up 200 points in the first three minutes of trading, after investment banks Goldman Sachs and Lehman Brothers (LEH) released first quarter earnings. Goldman lost $2 billion on mortgages and credit products, but beat expectations in commodities and asset management. It was the first decline in year over year earnings for GS in 11 quarters. GS closed up $24.57 to $175.59. Lehman announced a 57% profit drop on fixed income losses. LEH closed up $14.74 to $46.49, a record one day gain. The “survivor’s euphoria” refers to the fact that on March 16 the Federal Reserve now allows primary dealers to bring “a broad range of investment- grade debt securities” to the discount window at the Fed’s 2.50% discount rate. (If the Fed had taken this action before last Friday’s market open, the fate of primary dealer Bear Stearns might have taken a different course.) Lehman’s CFO Erin Callan described the Fed’s action as “a great opportunity to do more client business.” The market ignored her comment during the earnings call that Lehman “doesn’t anticipate market conditions to improve anytime soon.”

At 2:15 PM, the FOMC released its statement on interest rates. Indices began to weaken after the Fed announced a 75 basis point cut in fed funds to 2.25%, when many expected a full percentage point decrease. The market also didn’t like additional inflation concerns inserted into the statement, along with the fact that two members voted against the largest interest rate cut by the Committee since 1994.

I think the market began to realize that the Fed inserted the inflation remarks as an effort to revive the ailing dollar. Comforting phrases such as “downside risks to growth remain” and “the Committee will act in a timely matter as needed” was still there, indicating the helicopter engines are still running and ready for liftoff.

Yesterday’s stock market entry additionally forecast “Improving conditions around 2:30 PM.” This was because the Moon in Leo was going to exactly oppose Neptune at 2:39 PM. Lunar aspects start influencing the market a bit before they are exact. At 2:38 PM, the indices began rapidly climbing higher after President Bush said during a speech in Jacksonville that “they'll (Bernanke and Paulson) continue to closely monitor the markets and the financial sector. And the point I want to make to you is, if there needs to be further action we'll take it, in a way that does not damage the long-term health of our economy.”

As CNBC’s Bob Pisani commented after the market closed, a lot of the rally was due to short covering as well. Bear Stearns (which closed at $5.91) was a “watershed” moment for the market, which Treasury secretary Paulson used as the catalyst to inspire the market to rally on the belief that the big problems in the financial markets are over. For now.

Financial Times: “’Survivor’s euphoria’ may be only short lived”
Bloomberg: “’Big Rally’ for Stocks to Continue, Jim Rogers Says” (don’t let the title fool you)
Wall Street Journal: Editorial: “Inflation Dissent”

USA: July 4, 1776 5:10 PM LMT Philadelphia, Pennsylvania

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JP Morgan’s Bogus Bear Deal

I just finished listening to JPMorgan’s (JPM) conference call where the bank announced that it is acquiring Bear Stearns (BSC) for “$2.00 per share.” In a press release on JPM’s website as well as on the call, JPM “will exchange 0.05473 shares of JPMorgan Chase common stock per one share of Bear Stearns stock.” JPM stated that “The Federal Reserve, the Office of the Comptroller of the Currency (OCC) and other federal agencies have given all necessary approvals.”

JPM got a bit testy during the Q&A session of the call when questioned that shareholders must approve the deal. JPM emphatically stated that they have “every expectation that BSC shareholders will approve,” and that they would “be surprised” if BSC shareholders didn’t. And in the unlikely event that shareholders don’t approve on the first vote, JPM will continue voting rounds for up to a period of 12 months.

When questioned by a Merrill Lynch (MER) analyst how Bear went from a book value around $84/share to an offer of $2, JPM cited it was “their duty to protect their shareholders” with a “cushion.” Excuse me, but it is the Federal Reserve at this point that is providing a FREE CUSHION of up to $30 billion in the form of a special nonrecourse lending facility. JPM is taking on ZERO risk here, so then JPM focuses on the estimated $5-6 billion cost to complete the transaction (which they want to do in 90 days).

When asked by the MER analyst about Bear’s books, JPM said Bear has a “very, very good strong business.” JPM was “pleasantly surprised to see that it was a very well run good risk operation.” JPM mentioned several times that the deal “makes a lot of strategic sense” and is “compelling.” A Credit Suisse (CS) analyst asked if Bear owned their prime midtown Manhattan building, which JPM confirmed they did. (The building is estimated to be worth $1.2 billion.)

And JPM wants Wall Street to know that “having taken Bear out of the problem category, and the strong action of the Fed, we expect the market to behave quite differently on Monday than last Thursday and Friday.”

In my Weekly Forecast for tomorrow I stated how the opposition of Mercury and Saturn would create fear and false information and rumors, despite how “authoritative” the information being conveyed sounds. This is a bogus deal conjured up to buy time to soothe the markets. Go to
Yahoo! Finance and check out the list of top holders for Bear Stearns. Morgan Stanley (MS) owns 5.37%, Legg Mason 4.84%, Barclays 3.60%. In short, a lot of major hedgies and mutual funds have got a piece of Bear.

An individual investor on the call asked JPM how this deal benefits shareholders versus Bear going into liquidation. JPM said he would “have to ask Bear that question.” (Translation: the Fed doesn’t want that to happen; it fears a panic situation would ensue.) Executives from Bear showed their lack of enthusiasm and embarrassment by not participating in the call. JPM is stating that Bear’s Board of Directors approved the transaction. It would seem to me that Bear is just buying time to get their act together or get a foreign suitor “Bear-ing” Euros.

Related Post: “Bear Stearns: The Bare Facts”

UPDATE! The following was added at 10:02 PM on 3/16/08: In my haste to get this post out, I forgot to mention that the early evening press release along with JPM's 8:03 PM conference call, all occurred when the Moon in Cancer was VOC (Void-of-Course). This means that at a minimum, the saga of Bear Stearns will take a different course than JPM and the Fed have planned. As Weekly Forecast readers know, it can also mean that nothing will come of it.

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Bear Stearns: The Bare Facts

Amongst all the rumors, panic, and speculation in the market about Bear Stearns (BSC), little has been revealed. Rumors questioning Bear’s liquidity essentially created a run on the investment bank Thursday. After closing at $57.00 Thursday, Bear’s stock dropped to an intraday low of $26.85 on Friday, before closing at $30.00.

In a press release yesterday, CEO Alan Schwartz said that “our liquidity position in the last 24 hours had significantly deteriorated.” Bear made arrangements with JPMorgan Chase (who is Bear’s clearinghouse) to go to the Federal Reserve’s discount window on Bear’s behalf “to provide a secured loan facility for an initial period of up to 28 days allowing Bear Stearns to access liquidity as needed. Bear Stearns also announced that it is talking with JPMorgan Chase & Co., regarding permanent financing or other alternatives.” JPMorgan (JPM) received non-recourse financing from the Fed for Bear. This means that JPM would not be held liable if Bear defaults on the loan. Contrary to media reports, this is not a government bailout of Bear. The Fed would have required Bear’s collateral to be valued above the amount of the loan. The loan amount and details have not been disclosed. In a Friday afternoon conference call, Bear said it is working with Lazard (LAZ) “to pursue alternatives to insure we can protect customers well.” Bear’s first quarter 2008 earnings call scheduled for March 20 was rescheduled for March 17 at 4:30 PM. In the afternoon, ratings agencies S&P and Fitch cut Bear’s credit rating.

Last June I wrote about the problems Bear Stearns and the brokers would face beginning in August 2007. The final alignment of Saturn in Leo opposite Neptune in Aquarius last summer burst the speculative credit bubble. In September 2007, Saturn entered Virgo, the sign of the bookkeeper. Credit and lending tightened, resulting in a drop in value and a dry up of the market for asset backed securities and the related derivatives held by financial companies worldwide. Banks became suspicious of what other banks held on their books. Accounting regulations require that assets be “marked to market” (valued at current market pricing). Many of these financial instruments are illiquid (not easily tradable right now), so companies have to develop their own valuation methodologies.

In my Weekly Forecast, I wrote that yesterday’s market would be negative. Venus was opposing Saturn, which I thought would result in actions or statements made by regulators regarding the financials that the market would negatively react to. Pluto in Capricorn exactly challenged the USA’s tenth house (Midheaven) of global reputation in the horoscope. That aspect and the fact that the Pisces New Moon conjoined with Uranus, could create geopolitical shocks/surprises that would affect the stock market. Mercury aspecting Pluto can manifest in news that creates financial panic. Yesterday’s Mercury-ruled Gemini First Quarter Moon squaring the USA’s Neptune in Virgo, along with several planets in Neptune-ruled Pisces, resulted in more rumor than facts about Bear.

Bear Stearns began publicly trading on the NYSE on October 29, 1985. With its Sun and Pluto conjoined in Scorpio, it is very much affected by Pluto’s energies. Transiting Pluto is challenging Bear’s Mars in Libra at the Midheaven square Neptune in Capricorn. Pluto represents toxicity on a large scale. Rumors have elevated the level of fear in Bear’s liquidity, resulting in a run on the bank. Additionally, Pluto is conjoining Bear’s progressed* Ascendant,** transforming its public image. The March 7 Pisces New Moon/Uranus is conjoining Bear’s progressed Moon and squaring its progressed Uranus in Sagittarius, resulting in huge volatility and movement in Bear’s stock price. The lack of transparency by Bear’s executives has done little to calm the market. (In a Wednesday interview on CNBC, CEO Schwartz said that everything was fine at Bear.)

Bear’s relationships as a borrower and lender deeply entwine it with all the major financial players. This is why the Federal Reserve will not allow Bear Stearns to fail.

Related Posts about Bear Stearns:
"Barron’s Bounces Around" (8/13/07), "Who Knows What They’re Worth?" (9/4/07)

*A mathematical method of prediction that calculates the horoscope forward in time.
**The sign ruling the first house of the horoscope.
USA: July 4, 1776 5:10 PM LMT Philadelphia, Pennsylvania

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The Fed under Fire

Yesterday Mars, the fiery planetary energy of action, began its sojourn in emotional and security conscious Cancer until May 9, 2008. Cancer rules real estate.

Right on schedule, Mars in Cancer began to attack the Federal Reserve. Wall Street and Congress are fed up with the Fed for its failure to satisfy all of its constituencies. Congress is asking for greater oversight of the banking industry, but at the same time they’re resisting the Fed’s efforts to improve the mortgage underwriting process. Likewise, Congress is asking the Fed to control inflation, and simultaneously applauding an accommodative monetary policy to address the subprime crisis.

The days of Congress fawning over FOMC members are over. Yesterday Vice Chairman Kohn was grilled by the Senate Banking Committee for the Fed taking a relaxed stance when banks were taking on too much risk during the housing boom. The hearing marked the first time a Fed plutocrat had to acknowledge their role as bubble enabler: “I don’t know that we fully appreciated all the risks out there. I’m not sure anybody did to be perfectly honest.” Under questioning, Kohn later acknowledged that “the Fed did not perform flawlessly.” Republican Senator Richard Shelby asked Kohn if the Fed was afraid of the banks. Shelby was referring to the Fed and regulators caving into the banks’ lobbying efforts last July to prevent stronger risk guidelines on U.S. banks than European banks have under the Basel II agreement.

At a conference of the Independent Community Bankers of America in Orlando yesterday, Chairman Bernanke urged lenders to help struggling borrowers stay in their homes by reducing the principal of their mortgage as a way to reduce their monthly payments. Lowering principal alleviates homeowners being “upside down” (negative equity), as they owe more on the home than it is worth. Wall Street was not warm to the idea, with the indices lower until happy talk rumors regarding bond insurer Ambac (ABK) surfaced late in the day.

Mars was previously in Cancer from September 28 – December 31, 2007. It was during this time that banks began taking large write downs on their bad debt. As befitting of Mars in Cancer, S&P’s Sam Stovall at that time called it the “kitchen sink quarter.” With Mars back in Cancer again, the world is finding out that the corporate kitchen sink is clogged with stagnant water. The “Plunge Protection Team” (as the Fed is nicknamed), would like to unclog the drain but the lenders are not willing to take a “real” write down (actual financial loss).

Between now and May 9, Mars attacks the USA’s Venus, Jupiter, and Sun in Cancer. This means that over inflated real estate prices must come sharply down, impacting the overall American economy. Mars also challenges the USA’s Saturn in Libra located in the area of the horoscope representing Congress. Mars makes its finale with an opposition to the USA Pluto in Capricorn in the house of banking and the economy. Legislative and governmental regulation will force the financials to fix the sink. And the Fed? The public is angry (Mars) that lower interest rates have not only failed to reduce their loan payments, but the resulting higher inflation has spiked the cost of food (Cancer). Mars in Cancer is a brief preview of what the Fed faces in late 2008 to 2009 when Pluto in Capricorn impacts the Fed’s Pluto in Cancer and Sun in Capricorn. The structure and power of the Fed and the influence of its Chairman will be transformed.

Federal Reserve: December 13, 1913 6:02 PM Washington, DC
USA: July 4, 1776 5:10 PM Philadelphia, Pennsylvania

Wall Street Journal: “Fed Admits Missteps on Banks” and “Fed Chief to Lenders: Cut Mortgage Principal”

Related Posts: “Resetting the American Dream”, “The Missing Element”, and “The Fed’s Future”

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Even Oprah Couldn’t Overcome a Void Moon to bring about “A New Earth”

I have always admired Oprah Winfrey, primarily for her business success that is the direct result of her powerful charismatic personality. I share Oprah’s love of books and spirituality. Last night, Oprah began a webinar (online seminar) for Eckhart Tolle’s book, “A New Earth: Awakening to Your Life's Purpose.” For the next ten weeks for 90 minutes beginning at 9:00 PM (Eastern Time), Oprah and Eckhart will discuss “A New Earth” with the web audience.

The webinar was sponsored by Chevrolet (GM), Post-It Flags (MMM), and Skype (EBAY). The companies’ logos appeared around the frame of the video. It reminded me of PBS sponsorship where the companies are announced, and maybe have a very brief commercial, but it’s not annoying. With the Moon Void-of-Course all day yesterday, I was skeptical that even Oprah would not be able to pull off the event without a hitch.

Readers of my Weekly Forecast know that the Moon is our emotional barometer. When the Moon ceases to form any relationships (aspects) to another planet before changing signs, it is said to be Void-of-Course (VOC). Events have a tendency not to go as planned when the Moon is VOC. The stream began interrupting about 17 minutes into the webinar, and within three minutes became unwatchable. In a press release this morning, Harpo Productions said that “more than 500,000 people simultaneously logged on to watch Oprah Winfrey and Eckhart Tolle live, resulting in 242 Gbps of information moving through the Internet.”

Besides having enough power to handle such a large amount of web traffic, it is important to schedule events for the most opportune time. The Moon was VOC in Capricorn, a sign ruled by Saturn. Saturn represents boundaries and limits, constraining Oprah’s computing power in reaching her vast audience. The event may have had a smoother outcome if it had been scheduled for today (March 4) with the Moon in Aquarius. Aquarius is a sign ruled by Uranus, the great awakener. Aquarius/Uranus rules electronics and technology, such as the internet, as well as people connecting as a group. The planetary aspects this week are ideal for understanding and incorporating a shift in consciousness, as Mercury (the message), Venus (values), and Neptune (beliefs), are aligning in progressive Aquarius.

The moment you begin an action creates its overall energy pattern. On March 10, the Moon will be in Taurus, so the webinar should run smoother. The Taurus Moon then will work well with the Chapter 2 discussion on “identification with things.” As an earth sign, Taurus rules the physical senses and earthly form.

Oprah is creating a paradigm shift in two ways. With her Sun, Mercury, and Venus in Aquarius, she is bringing a new message and a new medium of transmitting that message to the masses. Oprah can reach her audience without being constrained by the cable industry. This has the potential to change the whole dynamics of the broadcast industry if content developers are able to reach audiences directly without having to relinquish any advertising revenue to the cable industry. “A New Earth” indeed.

Oprah Winfrey: January 29, 1954 4:30 AM CST Kosciusko, Mississippi

Related Post: “Using Star Language to Connect AT&T’s Call to a Hollywood/Silicon Valley Venture”

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Using Star Language to Connect AT&T’s Call to a Hollywood/Silicon Valley Venture

It’s always amusing when mainstream journalists use planetary energies to describe things. Here’s the opening paragraph from an article in today’s New York Times on “Hollywood, Silicon Valley and AT&T? It’s a Deal” by Laura M. Holson:

“Hollywood and Silicon Valley have something of a Mars/Venus problem: the two sides are talking but they don’t speak each other’s language. A new venture involving a phone company may just add Pluto into the mix.”

Hollywood talent agency William Morris is expected to announce today it is partnering with Silicon Valley venture capital firms Accel Partners and Venrock, to invest in primarily southern California based digital media start-up companies. AT&T (T) is signed up as a limited partner to tap into the ever growing audience viewing entertainment and visiting social networks on their mobile phones.

Let’s examine the astrology (a Greek word that means “star language”) Ms. Holson has used. Mars and Venus as a catchphrase for anyone who has difficulty communicating with anyone else became popular after John Gray’s bestseller, “Men Are from Mars, and Women Are from Venus.” It is correct that when viewing the horoscopes of two people for compatibility, you would look at their Mars (energy) and Venus (attraction). Language (as Holson writes), is ruled by Mercury, the planet of communication. Two people can be attracted to each other, but if their communication styles are incompatible, a lasting relationship becomes more challenging. Pluto is about power and influence, as well as hidden agendas. There’s no question AT&T fits the bill. Holson’s article states that AT&T’s real interest lies in its desire “to invest in technologies that will make it easier to run ads on cellphones, as well as to nurture social networks like Facebook and MySpace.”

Astrologically, Hollywood and the film and music industries are ruled by Neptune, the planet of fantasy, glamour, and illusion. Venus also relates to Hollywood as most of the “beautiful people” reside here. Venus rules beauty and money, and you can never have enough of either in Hollywood. Silicon Valley is ruled by Uranus, the planetary ruler of electronics and technological innovation. Since Uranus entered Neptune-ruled Pisces in 2003, special effects work by Silicon Valley companies for Hollywood movies has vastly increased. Companies such as Apple (AAPL) have been on the forefront of creating new entertainment devices such as the iPod and the iPhone. Neptune has resided in Uranus-ruled Aquarius since 1998, ushering in the rise of the internet as a vast social and entertainment forum where people can stay in touch with their friends and connect with others who share their interests. Because Uranus and Neptune are residing in each other’s signs, it is only natural that Hollywood and Silicon Valley would see the synergy. Mercury rules all forms of communications as well as the devices that transmit them. Creating entertainment for internet and mobile phones (“the new media”), is a combination of Mercury, Uranus, and Neptune energies, with old line behemoths such as AT&T seeking ultimate domination and control of it (Pluto).

This week’s planetary energies are reflective of this deal. On Wednesday and Thursday, the Moon (emotional barometer) will be in Aquarius and make alignments with Mercury, Venus, and Neptune. Venus will conjoin Neptune on Thursday, and the Sun in Pisces will hookup with Jupiter, the planet of optimism and expansion. To top it off, Friday’s New Moon in Pisces will conjoin Uranus. In essence, expect to see business deals involving large companies financing new technologies involved in the business of beauty, glamour, and illusion.

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Larry Kudlow, Inflation Fighter

There are many indicators that all point to inflation spiraling out of control: food, energy, medical, commodity prices, and a falling dollar. But you know inflation is really a problem in America when free market capitalist Larry Kudlow is “concerned.”

Larry Kudlow is the host of CNBC’s Kudlow & Company, a show described by the host as “money, politics, stocks – that’s our beat.”

With his Sun in Leo (the stock market), conjoined with Mercury (communication) and Venus (finances), Larry Kudlow always sees the sunny side of the financial markets. Like Federal Reserve Chairman Bernanke and Vice Chairman Kohn, Kudlow lacks the earth element* in his planetary lineup. The ultimate Permabull, he views financial conditions with “the glass half full.” This reflects his Mercury/Venus squaring Jupiter, the planet of growth, expansion, and optimism.

I am an occasional watcher of Kudlow & Company. I disagree with most of his political views, and his incessant “free market” shtick gets pretty grating. However, Kudlow is not the typical conservative pundit that has no real knowledge or experience about the economy. Kudlow was an economic advisor to President Reagan, and the chief economist at Bear Stearns (BSC). He began his career as a staff economist in the open market operations division of the Federal Reserve Bank of New York.

So for Larry Kudlow to declare on his February 26, 2008 show that “I don’t know what the Fed is watching” (meaning inflation indicators), and that he is “concerned about inflation” – is a BIG deal. Just to confirm I wasn’t imaging things, I tuned into his show the following evening. Once again, Kudlow expressed his frustration with the Fed. I recommend readers check out a post from Kudlow’s blog titled, “Is the Fed in Denial About Inflation?”

Larry Kudlow may not be “Right (correct) on America”, but he’s certainly Right on Inflation.

Larry Kudlow: August 20, 1947 time unknown Englewood, NJ
Related Posts from Wall Street Weather: *“The Missing Element”, “The Fed’s Future”, “Inflationization”, “Wheat Goes Wild”

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The Feel Good Factor: Mercury, Venus and the Stock Market

“Stock investors remained focused on feel-good stories.” – Wall Street Journal, Feb 27, 2008

Why was the stock market up yesterday despite falling home prices, record oil, a dollar low against the Euro, and wholesale inflation numbers not seen since 1981? Mercury conjoined Venus.

Mercury rules news, and Venus is about feeling good. When these two planets are conjoined, people are more inclined to focus on the pleasantries of life. It’s the love story with the happy ending.

The stock market was no exception. Mercury and Venus were conjoined in Aquarius, a sign that rules electronics and computer technology. IBM closed up $4.30 to $114.38 after raising its 2008 earnings forecast, and announcing another stock buyback valued at about $15 billion. Intel (INTC), and Hewlett-Packard (HPQ), joined IBM as the top three DJIA percentage gainers yesterday.

Aquarius also rules the unexpected. Logically, one would surmise that record setting food and energy prices would diminish consumers’ purchasing power to buy discretionary goods and services. According to Pete McCorry, a senior trader at Keefe, Bruyette & Woods, the market viewed it this way: “You’ve got the Treasury Department handing out checks, and the Fed looks like it’s going to remain on a path of easing, which should lessen the burden on the consumer.”* Venus rules consumer discretionary goods. This is why jeweler Zale (ZLC) closed up $1.18 to $17.93. Macy’s closed up $1.76 to $26.52. The upside came despite lower sales and the retailer’s announcement that it would no longer provide quarterly sales and earnings guidance.

Investors should keep in mind that Mercury conjoining Venus is usually a one day influence. When the book has been read and the movie ends, it’s back to the longer term influences of the slower moving planets Jupiter through Pluto.

Related Post: Weekly Forecast. Check out the Cycles section at Wall Street Weather.

* Mr. McCorry was quoted in the 2/27/08 WSJ.

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America Saves Week: February 24 – March 2

While paging through the local paper yesterday, I spotted a bank ad touting a 48 month Certificate of Deposit for 3.5% APY. The barely legible print at the bottom of the ad said that the CD requires a $10,000 minimum of new money to the bank. Wow, I bet people will be standing in line for the bank to open this morning.

What was featured much more prominently in the ad is that this bank is a proud sponsor of “America Saves Week.” According to its website, “America Saves is a national campaign involving more than 1,000 non-profit, government and corporate groups that encourages individuals and families to save and build personal wealth.” The organization’s National Advisory Committee consists of government agencies that do their best to discourage and erode savings: the Federal Reserve Board, Internal Revenue Service (IRS), and the Department of the Treasury.

The IRS and the Treasury are directed to carry out their duties through acts of Congress. It is the tax code that has turned the U.S. into a primarily consumer driven economy that encourages borrowing and spending rather than saving. Interest income is taxed because the government has brainwashed the public that only “the rich” have interest income. Tell that to millions of senior citizens and every other person who wants to save. (The least the government could do would be to only tax interest income on individuals whose income is at least $100,000 a year.) Instead of spending money on sorely needed infrastructure projects that create jobs and help state and local economies, the government’s solution was to pass a $168 billion stimulus package, encouraging the public to spend their forthcoming rebate check on consumer discretionary items.

The Federal Reserve’s monetary policy has done everything possible to discourage saving. First it was through keeping interest rates too low for too long. Besides causing the housing and credit bubbles, it encouraged people and institutions such as insurance companies and pension funds, to invest in risky securities to obtain a higher yield. The dual mandate enacted by Congress in 1978 has done nothing to increase the Fed’s focus on savings. The only group helped by the FOMC’s accommodative policy is the banks; low rates widen the yield spread between the interest banks pay to savers and the rate banks charge borrowers. As financial companies have tightened their lending standards, borrowers are not benefiting from lower interest rates.

The FOMC has chosen to ignore ever rising inflation that not only makes saving harder, but further erodes it. When people have to pay so much for the necessities of daily living (including taxes of all stripes), all the education in the world will not turn the national savings rate around.

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The Financial Times Takes Jim Cramer to Lunch

My favorite weekly newspaper column is the Saturday Financial Times “Lunch with the FT.” An FT journalist takes a person well known in their field out to lunch at the restaurant of their choice. The lunch will usually bring out a different perspective about the person, and it’s fun to read what they ate and how much it cost.

Today FT’s Chrystia Freeland had lunch with the Mad Money madman and TheStreet.com (TSCM) co-founder Jim Cramer. The two dined in a private room at Bobby Van’s Steakhouse across from the New York Stock Exchange, “an old-fashioned steak and seafood joint that is all about men and money.” Cramer and Freeland ate in a private room, but diners can eat in the Vault Grill - J.P. Morgan’s original bank vault.

With his Sun and Mercury conjoined in Aquarius, Cramer shines by expressing himself in original and unpredictable ways. An air sign that rules electronic communications, Cramer relishes being “on the air”. Aquarian energy can be rebellious and non-conforming to the point of eccentricity. One of the segments on Mad Money is the “lightning round” where people call in and ask Cramer’s opinion of a stock in “rapid fire succession.” Aquarius and its planetary ruler Uranus rule lightning and freaky weather patterns; the symbol for Aquarius resembles a streak of lightning. CNBC calls Cramer “the most electrifying man on television.”
Aquarius is known as the humanitarian of the zodiac. This energy espouses freedom and equality; usually uniting as a group for a common cause (Cramer just joined the Elks). Cramer is passionate about bringing his knowledge and experience of the stock market to the “regular guys.” And if that means wearing a diaper to make his point, so be it.

Cramer was born with Mercury retrograde, a position shared by many famous writers as it gives them a more introspective nature that can enhance the color of their writing. He tells Freeland that he “always wanted to be a journalist.” Cramer began his career as a newspaper journalist, and in retrograde fashion, has returned to writing. Besides TheStreet.com, he writes a column in New York magazine, and has authored five books. His first book, Confessions of a Street Addict, is more memoir than investment how-to. It’s Cramer at his most raw and it’s extremely insightful about life on “the Street”. In short, a must read.

With his Sun/Mercury in a challenging aspect to Saturn in Scorpio, Cramer truly does fear and loathe expressing his “innate insanity” before the public. His real feelings are probably to be found below the surface of a frozen lake. Pluto in Leo opposes his Sun/Mercury. Cramer wrote a New York magazine cover story about himself asking the question, “Why does everybody hate me?” Cramer has an extreme temperament and doesn’t take kindly to influential people or publications (such as Barron’s) that oppose his views. But he does enjoy the drama of dishing it out, such as his infamous “they know nothing” rant attacking the Federal Reserve last summer.

Major changes are in store for Cramer as transiting Neptune in Aquarius is challenging his Sun and Saturn, followed by his Pluto and Mercury, between now and 2010. He needs to take care with his own financial and business arrangements, which will take a new direction. The public will see more of the humanitarian side of a compassionate Cramer.

Jim Cramer: February 10, 1955 time unknown Wyndmoor, Pennsylvania
Related Posts: “Cramer Acknowledges the Power of Pluto!”

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Proposals for a Depreciating Housing Environment

Being “upside down” is the term for when a borrower owes more on a car than the car is worth. Cars have always been a depreciating asset, but real estate has not been viewed in the same way. That is about to change.

Today’s New York Times describes how falling home prices are affecting sellers who are not only taking a loss on their home, but have to bring cash to closing to cover their shortfall. The housing market has become stagnant as inventories of homes for sale continue to rise, but homeowners and banks are unwilling to sell at a deep discount.

Some members of Congress, such as House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd, have called for the federal government to buy certain mortgages. A plan by John M. Reich, the director of the Office of Thrift Supervision (regulates the S&Ls), would allow a “negative amortization certificate” lien to be put on the home. My interpretation is that the plan could only be financially viable if investors bought the lien certificate at a deep discount on the anticipation that real estate values will at least modestly rise. Since I believe that is unlikely to occur, the more likely outcome of Reich’s plan would be to essentially put real estate in a “lockdown” mode. No buyer will come to close unless all liens are removed (or the title insurer is willing to exempt the lien). In a depreciating asset environment, lenders would have to give certificate lien holders a financial incentive to allow the property to close unencumbered at a lower price.

Banks are becoming more vocal with their own proposals. Credit Suisse (CS) is complaining that the Federal Housing Administration’s FHA Secure program to exchange subprime mortgages to a federally guaranteed fixed rate offers little help. The Swiss bank has held meetings with the FHA, proposing that borrowers who have made at least six mortgage payments should qualify. Bank of America (BAC) which will have even greater mortgage exposure after it acquires Countrywide Financial (CFC), proposes “to create a new federal agency that would buy vast quantities of delinquent mortgages at a deep discount and replace them with fixed-rate federally guaranteed loans.”

The federal government should not be purchasing mortgages. A more viable solution would be for the government to guarantee mortgages after the home has been substantially reduced to a value level that leaves little financial risk. In order for this to happen, lenders would have to be willing to accept that their writedowns are real.

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Northern Rock becomes National Rock

The announcement by Chancellor of the Exchequer Alistair Darling on February 17 that troubled mortgage lender Northern Rock is to be nationalized by the UK government, has erupted a storm of criticism, particularly from the Conservative party and Northern Rock shareholders.

Northern Rock was born from the merger of Northern Counties Permanent Building Society and Rock Building Society on July 1, 1965 in Newcastle upon Tyne. Northern Rock’s founding Sun is in Cancer (real estate). The founding chart features a stressful alignment between the business cycle planets Jupiter and Saturn that form a square to Pluto (debt/lending). Transiting Uranus (shocks/surprises) first began to adversely impact Northern Rock in spring 2006, becoming more pronounced from February 2007 onward. This coincided with the general transit of Saturn opposite Neptune; their final alignment last summer ushered in the credit crisis. Saturn represents tightening conditions. Neptune rules credit conditions and asset bubbles. As the planet of illusion, credit availability can disappear.

When Northern Rock became a publicly traded company on October 1, 1997, Venus (banking) was in Scorpio in the second house (banking) of its stock chart. Scorpio rules loans and lending practices. Scorpio was ruled by Mars before Pluto was discovered. Mars and Pluto are also in the second house in Sagittarius. Sagittarius is ruled by Jupiter, the planet of optimism and expansion. According to the Daily Telegraph, it was at this time that Northern Rock began borrowing money from the financial markets in addition to lending out its deposits from savers. The cycle of Pluto in Sagittarius (1995-2008) facilitated a more relaxed approach to lending worldwide, with the attitude that asset values would continue on an ever upward trajectory. On September 14, 2007, transiting Saturn in Virgo challenged Northern Rock’s stock chart natal Mars, indicating a run on the bank.

Eclipses are harbingers of major change. The February 6, 2008 Aquarius solar eclipse challenged Northern Rock’s founding chart Neptune in Scorpio. The UK chart* also has Neptune in Scorpio in the second house of banking, showing the government felt the only way Northern Rock could be saved and eventually resurrected was through nationalization. The solar eclipse also aligned with the UK’s Venus in Aquarius, highlighting banking issues. In addition, the eclipse opposed Venus in Leo in the chart** for the start of the government of Prime Minister Gordon Brown. The February 20 lunar eclipse squares the Sagittarius Moon in the second house of banking and the economy in this chart, showing the public is not happy with how these issues are being handled. Brown himself gets eclipsed as his birthday is today.***

Pluto in Capricorn will fundamentally change the very foundations of world governments and corporations between now and 2024. It is already challenging the UK’s Uranus in Libra. Libra is the other sign ruled by Venus. With Venus such a prominent energy in the UK chart, many more financial surprises are in store.

* United Kingdom Act of Union: January 1, 1801 12:00 AM GMT Westminster.
** Brown Government: June 27, 2007 1:30 PM GMT.
*** Gordon Brown: February 20, 1951 8:40 AM UT Glasgow, Scotland.

Related Posts: “Party’s Over” , “Time to Economize”

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