Saturday, July 14, 2012
China avoids hard landing; Saturn to enter Libra
This mixed result was not unexpected as I had been fairly neutral about last week. The nasty Mars-Ketu aspect in the early week did produce some significant downside, especially on US and European markets. I thought we would see some kind of recovery starting midweek around the Mercury-Venus aspect. As it happened, this finally arrived on Friday but made up for the preceding days' losses.
While China avoided the worst case scenario, Friday's rally assumed that the weakening growth data would nonetheless still require more stimulus from the Chinese government. In that sense, the stock market is still as addicted to central bank interventions as ever. A recent study has suggested that without the Fed's quantitative easing measures over the past three years, the market would be 50% lower (i.e. Dow at 6500) . The problem for stimulus-addicted investors in this US election year is that the Federal Reserve cannot be seen to be partisan. A new round of QE would likely boost the stock market and this could therefore improve Obama's re-election chances. Republicans have increased their criticism of the Fed and Ben Bernanke in recent months for debasing the dollar and creating inflation. If Romney happens to win the election, there will be many in the Republican party who will call for Bernanke's removal as Fed Chair. Bernanke's ouster would be all but certain if he decided to launch QE3 in the next month or two before the election and then Romney won anyway. Therefore, Bernanke therefore needs to tread very carefully this summer and avoid sparking more opposition.
The astrological case for QE3 is far from clear. A significant round of stimulus would tend to require many Jupiter aspects as that planet rules expansion. The printing of money in order to stimulate the economy is very much a Jupiter-type of activity. We had major Jupiter aspects from 2009 to 2011 when Jupiter formed prolonged angles with Neptune, Uranus and Chiron for months on end on several different occasions. This is not the case now. This would tend to argue against another major round of QE, although it may not preclude smaller, less intrusive measures. The next major Jupiter aspect is not due to occur until early 2013 when Jupiter forms a close aspect with Uranus. That may be a better bet for the next major easing from the Fed, or from other central banks. It is possible that China's central bank could act before then, but it may not be large enough to spark a major rally. Jupiter is in aspect with Uranus and Pluto this week, so that might suggest a somewhat greater likelihood of some kind of expansionary activity taking place.
This week looks like it could bring some interesting developments. There is powerful alignment of planets through much of the week that could move markets significantly. The ongoing Uranus-Pluto square aspect is joined by both Mars and Jupiter this week. The last time the Uranus-Pluto aspect was activated by a third planet was after the EU summit on June 29 when the market rallied strongly. This occurred as the Sun lined up in a t-square with those two distant planets. This time around Mars will assume the role of the Sun, and form another t-square. Mars is more of a negative influence than the Sun, however, so there is less reason to expect gains, at least in the early going. Of course, Mars has the capacity to take the markets lower so that is definitely a possibility at some point. However, the presence of Jupiter in the mix would seem to be more positive. It forms a close aspect with Uranus later in the week which tends to correspond with gains.
But even if we do happen to see some upside here, the clock would appear to be ticking on the market as Saturn approaches its entry into sidereal Libra on August 1. This is usually a bearish influence. Previous Saturn sign changes have corresponded closely with declines. Saturn first went into Libra last November when the market dropped more than 10%. As it moved backward through its retrograde cycle, it then entered Virgo in May and the market declined again. Saturn's re-entry into Libra here is definitely not something to be taken lightly.