Monday, November 21, 2016

Trumponomics and the US economy: the next four years

(21 November 2016) Donald Trump is bold, if nothing else.  The incoming Trump administration intends to begin its term with a bang by boosting economic growth through a massive $1 Trillion infrastructure program in addition to re-negotiation several trade deals.  Financial markets have welcomed these plans as the stock market has risen alongside the US Dollar since the November 8th election.  Investors are expecting higher growth and more jobs from Trumponomics but it remains to be seen how effective it will be.  While infrastructure spending can raise growth, any interruption in trade could be more problematic as the experience of the 1930s reminds us.  The retreat into protectionism and nationalism not only exacerbated the Depression, but it may also have indirectly led to World War 2.

Whatever the merits of the plan, the planets do not offer support for significantly stronger economic growth over the next four years.  Indeed, there is a heightened risk of recession during this time.  We can see the potential pitfalls in the USA horoscope.  While there are any number of factors we could look at, let's simplify it to just two: dasha periods and transits.  When we analyze national charts, it is best to keep our variables to a minimum.  Economic activity is seen through the 2nd house of wealth and assets, the 2nd house lord, the 11th house of income and gains, and the 11th house lord.  The Ascendant, Sun and Moon may also provide supplementary information depending on whether they are influenced by benefic or malefic transits.  The economy will tend to do well when these chart factors are influenced by benefics like Jupiter, Rahu, as well as the outers Uranus, Neptune and Pluto when in soft aspect.  The economy will tend to contract when influenced by Saturn, Ketu, and the outers when in hard aspect. 

Let's take a look at the transit picture first.  A key reason why I am less than optimistic about the the next few years is that Saturn will transit through sidereal Sagittarius.  It begins in late January 2017 and continues through all of 2018 and some of 2019.  This transit happens every 29 or 30 years and is associated with economic slowdowns.  The reason isn't hard to see when you look at the USA chart.  Saturn is the planet of pessimism and restriction and Sagittarius is the sign of the Ascendant, which symbolizes the country as a whole.  That in itself is a difficult influence.  But Saturn also opposes all those planets in Gemini: Mars, Venus, Jupiter and the Sun.  We could also include Mercury in early Cancer since Mercury is the significator of economic activity. 

Venus is one of those Gemini planets and its affliction by Saturn is a double whammy since it rules the 11th house of income and gains.  The Saturn opposition to Venus will therefore tend to depress economic activity.  The Saturn transit of Sagittarius is uniquely damaging to the US economy since it also casts its full-strength 3rd house aspect to the Moon, symbolizing the people as a whole.  This can create a pessimistic mood for many months due to the slow velocity of Saturn.  Saturn also casts its other full-strength 10th house aspect to the 10th house which contains the sign of Virgo.  We can see that Virgo is another very important sign for the US economy because it contains Saturn (24 Virgo) which rules the 2nd house of wealth in the horoscope (i.e. Capricorn).  

So Saturn's transit of Sagittarius actually negatively impacts most of the planets in the chart.  It is not surprising then when we discover that Saturn transited Sagittarius during the worst economic depression in US history.  Saturn entered Sagittarius in December 1928 and exited in December 1931.  If we include early Capricorn due to the presence of Mercury in early Cancer, then that Saturn transit influence was in effect through much of 1932.  This was the low point of the Depression.

This doesn't mean that the US is facing another Great Depression, however.  Saturn transits though Sagittarius every 30 years so we also need to account for the relative prosperity during its previous transits in 1987-1990 and 1958-1961.  Actually there were mild recessions in both those periods also although they were far less painful than the early 1930s.  Why?

The other modulating factor is dasha periods.  A good dasha period can significantly offset the effects of a bad transit.  The relatively mild recession in 1990-1991 coincided with a Saturn transit of Sagittarius but the US was running the largely positive Venus-Mercury dasha period.  Both planets are natural benefics and both are only modestly afflicted in the chart as Mercury is in a wide conjunction with Rahu in the 8th house while Venus is nicely placed in the 7th alongside the Sun and Jupiter albeit receiving a square aspect from Saturn. 

The previous transit of Saturn through Sagittarius in 1958-1961 occurred during Mercury-Rahu and Mercury-Jupiter dashas.   Mercury-Rahu would be fairly mixed since both are situated in the difficult 8th house (even if Mercury is generally positive) but the subsequent Mercury-Jupiter dasha period is quite positive so that may have been one reason why the recession was not severe. 

The unique problem with the 1930s Saturn transit of Sagittarius is that it occurred during a Saturn dasha period.  The Saturn dasha began in early 1929 and continued through the 1930s and into the early 1940s.  The transit therefore compounded the affliction that was already underway from the dasha period. The result was the worst economic contraction in history.

When Saturn enters Sagittarius this time around on January 25th, the US will be running the Rahu-Rahu dasha period.  Rahu is the Sanskrit name of the North Lunar Node and is associated with instability, change and distortions.  It can be positive in some circumstances, although its 8th house placement makes that more difficult.  It is not surprising perhaps that Trump's win has occurred during a Rahu dasha period since it represents a major break with the status quo and radical change.  And yet the Rahu influence does not seem positive on balance.  Therefore, I would expect the US to have a recession that was more severe than in 1990 or 1960 but probably not as bad as the early 1930s.

We should also note that when positive transits are dominant, the Rahu dasha period could bring important research and innovation.  Benefits can also derive from the assets of other people (allies, friends, foreigners).  But when malefics transits are stronger as will likely be the case most of the time when Saturn is in Sagittarius, we could see scandals and mysteries exposed that cause disruption of the status quo.  A positive spin on that might suggest that the "draining of the swamp" in Washington will uncover some major corruption.  And yet the Rahu placement in the 8th house definitely carries a default negativity.  Knowledge and clarity may be gained in this process but it may not be helpful or used constructively.  It looks like an uncertain time. 

Even after the Saturn transit, I would think the nodal return of Rahu to its natal position in mid-2018 may well culminate these afflictions and could coincide with a major scandal that could seriously damage the administration.  I hope to revisit this possibility of a scandal or impeachment in the coming weeks.  Assuming that Trump manages to withstand the effects of some difficult transits over the next two months and is inaugurated, his administration is likely to have a tough time of it. 

Weekly Market Forecast

US stocks were generally higher last week as investors anticipated lower taxes and less regulation from the incoming Trump administration.  The Dow gained slightly on the week to finish at 18,867.  Along with most emerging markets, Indian stocks fared worse, however, on the soaring US Dollar as well as the ongoing cash shortage from the demonitisation plan.  The BSE Sensex was lower last week and has even broken below the 26,000 level in Monday trading.  In last week's market forecast, I thought the bearish alignments warranted some caution, especially later in the week after the Sun had entered Scorpio and the approach of the Mercury-Saturn conjunction.

This week also argues for caution as Mercury finally conjoins Saturn on Wednesday just ahead of the Thanksgiving holiday.  This is a potentially very bearish pairing since the conjunction will occur in a sensitive point in the US chart at 22 Scorpio -- in close alignment with the Sun and the Ascendant. The state of Michigan reports its election results on Tuesday so that is one possible catalyst for a market move.  The early week also seems difficult as Mars aligns with Rahu (North Node).  In any event, US stocks are looking increasingly vulnerable to declines, despite the Trumpian optimism. 

For more details and analysis on market trends for this week, this month and this year, please check out my weekly MVA Investor Newsletter.  The newsletter is published every Saturday and includes extended discussion of US and Indian stock markets, as well as gold, oil and major currencies.