Monday, October 26, 2015

New House Speaker Paul Ryan faces US debt ceiling showdown

(26 October 2015)  And so it begins again.  The annual political wrangling to raise the US debt ceiling is now in full swing as both parties vie for advantage before the November 3rd deadline.  Since the US government must rely on borrowed money to stay solvent, Congress's failure to raise the debt ceiling would cause a default.  Previous debt ceiling crises occurred in 2011 and 2013 and brought sharp declines in the stock markets before 11th-hour compromises were finally found.  As always, Republicans are loathe to sign off on the ever-increasing debt load and are seeking fiscal concessions from the Democrats.  Of course, many Republicans also do not want to to see the US default on its debt as the financial consequences could hurt the whole country in the form of financial instability, lowered credit ratings and higher borrowing costs on its bonds. 

As an added wrinkle, this year's game of political chicken in Washington, DC will feature a new Speaker of the House.  Paul Ryan will likely be formally elected on Thursday as he replaces outgoing John Boehner.  Ryan faces an immediate test of his leadership skills as the right-wing of the GOP is more willing to risk the negative consequences of a default and may be less likely to back down in any negotiations.  Moreover, the Tea Party wing has serious reservations about Paul Ryan as the new Speaker and may work to undermine his leadership, perhaps using the debt ceiling fight for this purpose.

So what the chances of a potentially disruptive default?  The astrological indications suggest they are actually substantially higher than one would think.  Normally, both sides engage in the requisite levels of brinkmanship but the worst case scenario is avoided.  Most recently, this means that spending concessions are wrought by the Republicans in exchange for signing off on raising the debt ceiling.  This year I'm less sure we will get a repeat of this well-rehearsed script.  Alternatively, we may see a replay of 2011, when there was a failure to compromise by the deadline and we saw stocks plunge on a theoretical default.  But thanks to some arm-twisting and creative accounting, the US managed to step back from the abyss a few days after the passing of the deadline.

The horoscope of incoming Speaker Paul Ryan offers some clues about the chances for discord right at the time of the deadline on November 3rd.  Initially, he will likely be approved as House Speaker this Thursday, October 29th.  He thereby is benefiting from the triple conjunction of Venus (25 Leo), Mars (27 Leo) and Jupiter (22 Leo) transiting very close to his unequal 10th house cusp at 24 Leo (i.e. the Midheaven or MC).  This is very much in keeping with we would expect since the 10th house symbolizes status and achievement.  Jupiter also casts a near-exact 120 degree aspect to Mercury (21 Sagittarius) which is the lord of the 11th house of gains. 

The Wisconsin-based Congressman Ryan has now reached his highest level of political success with this election as House Speaker, the 3rd highest office in the land.  But his ascension has not been easy or smooth, a fact perhaps reflected in the prominence of transiting Saturn (9 Scorpio) just past his Ascendant (7 Scorpio).  This Saturn-Ascendant conjunction connotes hard work, heavy responsibilities and the possibility that he may not enjoy his fair share of public recognition.  On Thursday, the day of the House vote on his Speakership, 11th lord Mercury conjoins his natal Moon while the Sun conjoins Jupiter.  Those are usually very winning planets and exactly what one would expect for a promotion of this sort.

But the situation becomes more complicated by the time of the debt ceiling deadline next week on Tuesday, November 3rd.  Jupiter is now beginning to separate from its aspect with Mercury and opens the door to the possibility that Ryan's good fortune may be ending.  Transiting Mercury (8 Libra) comes under close opposition aspect of Saturn (9 Aries) and 8th house aspect cast from natal Mars (9 Pisces).  This not only suggests that a deal is less likely at the deadline, but it also indicates a disappointment or setback. 

With the transiting Sun (17 Libra) also in aspect with natal Rahu (18 Aquarius), there is some reason to think that there could be some unexpected developments that produce unwanted outcomes around this issue.  Perhaps the Venus-Rahu conjunction at 6 Virgo on November 8th is a more likely time for favorable outcomes for Ryan in this matter.  The Venus-Rahu conjunction occurs just one degree away from the cusp of the 11th house and suggests some kind of advancement or victory. 

We can also see the potential for problems with this debt ceiling debate in the USA horoscope.  Both Venus and Mars are both due to enter sidereal Virgo on the 3rd of November.  This will form a tight alignment with the Mars-Neptune square in the USA chart.  Mars is the planet of conflict and violence so the odds are greatly heightened for some manifestation of this Mars energy in the first week of November.  While this alignment doesn't necessarily signify a failure of the debt ceiling negotiations and a default, it increases the risk of this outcome.  Neptune's role here may well introduce an element of subterfuge and deception in the proceedings. 

It is tantalizing to think that that this debt ceiling deadline may somehow be related to the entry of Venus and Mars into Virgo on November 3rd.  As I have noted last week, this transit of Venus through Virgo has been quite negative for the stock market over the past six years.  While no single factor enjoys a 100% correlation with market movements, the fact that this transit occurs on the same day of the debt ceiling deadline is food for thought.  It is another reason to assume a more cautious stance with the markets in early November.

Weekly Market Forecast

Stocks generally rose last week as China's central bank cut rates in an effort to boost growth while the ECB talked up the possibility of more stimulus.  The Dow climbed 2% on the week to 17,646.  India's Sensex also rose 1% finishing the week at 27,470.   As I suggested in last week's stock market forecast, we saw some modest declines early last week on the Moon-Saturn pattern.  We also got some of the anticipated gains from the Mercury-Venus-Pluto alignment later in the week. 

This week seems more difficult than last week.  We did get some gains in Asia on Monday on the strength of Sunday's Venus-Jupiter conjunction.  But now this benefic pairing is weakening, there may be less positive energy available for markets to tap into.  US markets finally lower.  Tuesday's Sun-Saturn and Merucury-Mars alignments look more negative.  The Fed makes its latest policy announcement on Wednesday but there is an absence of close aspects that day so I'm less inclined there will be a sharp market reaction.  But the Moon-Saturn opposition on Thursday and even into Friday indicates more disappointment and an elevated possibility of declines.  Overall, this is not shaping up to be a great week for stocks.

Sunday, October 18, 2015

Financial markets stable ahead of Venus transit of Virgo

(18 October 2015)  When used wisely and judiciously, financial astrology can be a useful tool to investors.  While no one can predict the direction of the market 100% of the time, there are many well-established correlations which have a good track record of prediction.  One of these is the transit of Venus through the sign of Virgo.  Or more specifically, through the sign of sidereal (star-based) Virgo as is commonly used in Vedic astrology in India.  Western astrology employs the tropical (i.e. seasons-based) zodiac but evidence suggests that this correlation does not hold in that system.

I have found that stock markets generally do poorly during the four weeks that Venus transits through Virgo.  In financial astrology, Venus is considered the planet of money and value.  When it is well placed and unafflicted, stocks are more likely to rise.  However, when it comes under pressure from malefic planets like Mars or Saturn, stocks are more likely to decline.  And since Virgo is traditionally believed to be a sign where Venus is said to be debilitated, its transit of Virgo is similarly bad for stock markets around the world.

I have written previously about this fascinating and surprisingly simple correlation between the stock market and the Venus.  In the summer of 2013, I warned that the upcoming transit of Venus in Virgo would likely be bad for stocks.  Indeed, it was bad as the Dow Jones Industrial Average fell 3% during its 25-day transit of sidereal Virgo.  This pattern also held in 2014, as stocks also declined 5% when Venus transited Virgo in late September and early October.  This bearish transit happens once a year between the months of August and December and lasts for about four weeks.  The chart below shows how reliable this transit has been recently since the Great Meltdown of 2008.  What's more impressive about this correlation is that the declines have occurred during a massive bull market where US stocks have almost tripled in value.  Clearly, this is a fairly robust correlation that can outweigh other potentially countervailing factors. 


Year Venus entry date Venus exit date Market outcome
2009 October 9 November 2 -4%
2010 July 31 August 31 -6%
2011 September 9 October 3 -6%
2012 October 22 November 16 -7%
2013 August 11 September 5 -3%
2014 September 24 October 18 -5%
2015 November 3 November 29 ???

This year, Venus is due to enter sidereal Virgo on Monday, November 3rd.  It will continue to transit Virgo until Sunday, November 29th. I am fully expecting stocks to decline once again during this period, perhaps significantly given the other difficult planetary influences during the month.   I would think that a decline in the upper range of previous losses (6-7%) is likely and we could even see something more than that, at least measured from tip to trough.  Interestingly, the US Federal Reserve is due to release its latest policy statement just a few days before Venus enters Virgo on October 28th.  This may well be the catalyst for a negative market reaction that lasts through much of the month of November.  In any event, this upcoming transit is likely to see stocks tumble again.  The day of its exact entry into Virgo on November 3rd is more likely to cause problems since it will be conjoined (and hemmed in) by malefics Mars and Rahu (North Lunar Node). 

Weekly Market Forecast

Last week, stocks generally extended their gains as investors digested the idea that the Fed likely would not raise rates until next year.  The likelihood of more loose money in the US meant that risk assets like stocks were a safer bet.  In New York, the Dow climbed gained 1% closing at 17,215.  India's market enjoyed similar upside as the BSE-Sensex rose 200 points to 27,214.  This October rebound has not been surprising given the fading of the Saturn-Ketu (South Lunar Node) aspect since September.  As expected, we did see markets decline going into that aspect in mid-September but stocks have generally bounced back since then, perhaps as Jupiter has closely aspected Pluto.  Jupiter-Pluto aspects are usually bullish. 

This week may see further gains, although I would note that the Jupiter influence may be weakening now that it is separating from Pluto.  Perhaps the gains will be modest and possibly short-lived.  Also, the Moon is aspected by Saturn on Tuesday and Wednesday so we are likely to see some declines near those aspects.  The late week may be more positive, however, as Mercury aligns with Venus and Pluto. 

Monday, October 5, 2015

Jobs report disappoints: could the US be heading into recession?

(5 October 2015)  Friday's disappointing US jobs report is the Fed's worst nightmare.  Despite six years of near-zero interest rates and $4 Trillion worth of QE-style money printing, the US economy only added 142,000 new jobs in September, a number well below expectations and the key 200K level.  The US economy therefore remains very fragile and could tip into recession if global economic headwinds get worse.  The conundrum for the Federal Reserve is that it could be trapped at zero percent here with little room to maneuver in the event of another major economic slowdown.  The Fed had been promising for many months to raise rates back towards normal levels as the economy strengthened in late 2015.  Now that seems increasingly unlikely as the Fed may well be forming contingency plans for perhaps another round of quantitative easing (QE4) or even the dreaded nuclear option of negative interest rates.

But is the US economy really headed for another recession?  The horoscope of the US may offer some insights on this question.  To be sure, it is very difficult to extrapolate economic activity based on planetary transits alone.  Numerous other factors have to be considered and even then, we may only get an impressionistic picture.  But there is some evidence to suggest that whenever malefics Saturn and Ketu (South Lunar Node) are prominent in the USA chart, collective pessimism and economic contraction becomes more likely.  Specific afflictions to the Sun, Moon and 2nd house (= wealth, economy) may also indicate a slowdown of business activity and rising unemployment.  The matter is not a 'yes-no' proposition but more along the lines of a 'more likely-less likely' continuum.  The greater the number of these factors that are present in the chart, the more likely a recession becomes.

By way of example, the Great Recession of 2008-2009 occurred when transiting Saturn opposed the Moon for over a year including a near-exact direct station in June 2008 when the US job losses began to accelerate.   The Moon represents the population as a whole as well symbolizing the emotional state of the nation.  An extended transit by Saturn to the Moon is usually bad on a variety of levels, including the economy.   The 2nd house of wealth was doubly afflicted during this recession since the 2nd house ruler Saturn was aspected by Rahu in the second half of 2008.   Rahu then continued along its retrograde path to conjoin natal Ketu in the 2nd house (=wealth, economy) late in 2008. 

Currently, we can see that transiting Saturn is squaring the Moon so that might have accounted for the disappointing jobs report last week.  Saturn's forward square aspect is not a full strength aspect and it is moving more quickly now so it may not have a lasting impact.  Transiting Ketu's aspect to Mercury, the planet of commerce, may be another source of economic weakness at the present time.  But neither of these influences will last too long so I would think the chances of a further US slowdown in late 2015 are quite small. 

However, 2016 has a couple of potential trouble spots.  In March, transiting Saturn will station retrograde at 22 Scorpio while under the 3rd house aspect of natal Saturn.  This looks like it could reflect negatively on the economy, even if it may not herald a full-blown recession.  Interestingly, Saturn will square Jupiter at that time when both planets station in March and April.  This one way Saturn-to-Jupiter aspect should be seen as a negative indicator for economic sentiment, not just in the US but for the world generally.  As an added burden, we can see that the ongoing Uranus-Pluto square will line up against the natal Saturn at 24 Virgo in hard aspect.  This is likely to further weaken economic activity and increases the possibility of sudden (Uranus) and intense (Pluto) economic problems. 

The second half of 2016 looks perhaps even more challenging as transiting Saturn stations direct at 15 Scorpio and thus falls under the exact aspect of natal Rahu.  In this instance, Saturn, as 2nd house ruler, represents the economy and its extended affliction by Rahu is a strong indication of economic difficulties worsening in July 2016.  In addition, transiting Ketu will aspect the natal Sun-Jupiter-Venus conjunction throughout the second half of 2016.  While this is not conclusive evidence of a US recession in 2016 but it definitely increases the probability of a significant slowdown and possible recession. 

Weekly Financial Forecast

Stock markets generally rose last week as the jobs report meant the Fed was more likely to keep its zero interest rate policy in place a while longer.  In New York, the Dow gained about 1% closing at 16,472 while India's Sensex added more than 1% to 26,220 following a surprise 50 basis point rate cut by the RBI.  In last week's market forecast I had been fairly equivocal about last week although I did expect some gains into midweek at least as Venus entered sidereal Leo. 

Stocks were strong today (Oct 5th) as the Sun aligned with the favourable Jupiter-Pluto aspect.  This could produce some more upside perhaps going into midweek but there are three potential obstacles.  The Mars-Neptune opposition will tighten Tuesday and Wednesday.  This is usually a bearish influence although it may be partially muted by the Jupiter-Pluto aspect.  The late week may be disrupted by the Mercury conjunction with Rahu (North Lunar Node) on Thursday and Friday.  Moreover, Mercury is stationing direct on Friday and hence the conjunction may be that much more powerful. 

Also, there is a degreewise alignment with Saturn here to contend with.  Friday also features a close Venus-Saturn square.  In actuality, Venus, Mercury and Rahu are all aligning with Saturn in the late week.  This is a unusually large alignment of planets which may correspond with a significant market development.  Saturn's presence is generally negative although its effects sometimes manifest only after the alignment begins to separate (i.e. next week).  It should be an interesting week.