Stocks were mixed last week as more positive earnings reports took the edge off a possible rate hike in China. In New York, the Dow was higher for the eighth week in a row closing with a 1% gain to 11,871, although the broader averages such as the S&P500 lost about 1% to close at 1283. In Mumbai, the BSE-Sensex finished with a gain of less than 1% to 19,007 while the Nifty ended the week at 5696. Meanwhile, gold continued to languish as it lost another 1%.
This outcome was mostly in keeping with expectations as the bulk of the gains coincided with the early week aspects involving the Sun, Uranus and, of course, Jupiter. Tuesday was the most positive day of the week, just ahead of the Sun-Jupiter aspect. As expected, gold also rallied modestly on this alignment. Sentiment turned more negative on Wednesday, however, as irascible Mars combined with disruptive Ketu as most global markets sold off and were generally weaker through the end of the week.
As Jupiter moves away from Uranus, we may be witnessing a change in attitude towards risk and inflation. While much of the recent rally in stocks and commodities has been fueled by the conjunction of these two planets, it has also contributed to rising inflation throughout much of Asia. As optimism and risk-appetite wanes with Jupiter losing some of its power, we could see a new approach to inflation as emerging economies try to grapple with the fallout to the Fed's easy money QE2 program. Perhaps this will take the form of raising interest rates in China and India more than expected. This would send a message that inflation is a serious problem and the government is willing to sacrifice some measure of economic growth in order to secure a more stable price regime. Alternatively, it may also translate into a more cautious reaction by investors to central bank moves, whatever they may be.
This week Saturn turns retrograde so we could well see more evidence of a new approach to risk and growth. What's especially interesting here is that India's central bank meets on Tuesday and will likely announce new measures to tackle the problem including some kind of rate hike. Saturn actually turns retrograde on Wednesday, although there may be some manifestation of Saturn's penchant for caution and pessimism before then. What makes this Saturn retrograde station more problematic is that Mercury will be in close square aspect. This increases the likelihood of a mood of disappointment, perhaps coming from poor economic data. This is quite a similar planetary alignment as occurred in mid-January 2010 that coincided with the beginning of a significant decline across most world markets. At that time, it was Mercury that was turning retrograde and it formed a tense square aspect with forward-moving Saturn. We shall see how reliable this usually bearish pattern is this time. There is a greater likelihood for some kind of gains later in the week, especially on Friday as the Moon joins Venus in sidereal Scorpio.
