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.

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. 

MARKET EFFECTS OF VENUS TRANSITS OF VIRGO

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. 

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.

Supermoon draws blood on Wall St.

(28 September 2015)  Sunday night's 'Supermoon' seems to have sparked a big sell-off across most European and US stock markets today.  The Blood Moon (or 'Supermoon') is a fairly rare celestial event that occurs when a lunar eclipse coincides with the lunar perigee when the Moon makes its closest approach to the Earth.  The result is a bigger than normal sized full moon that appears red in colour as the shadow of the eclipsed Earth passes over it.  It certainly makes an impressive and beautiful nighttime display.  And there is no shortage of symbolic angst and dread attached to it, including passages from the Bible.

Maybe all the cultural beliefs and media hype around it merely produced a self-fulfilling prophecy as investors looked for any reason to lighten their risk.  Or maybe it was another piece of empirical evidence that shows that astrology is true and there are real and measurable correspondences between the motions of the planets and life on Earth.   Alas, the paradoxes in proving astrology is a problem for another day.  The daily movements of markets provide better a proving ground for testing our ideas.

The Dow lost 2% on the day finishing near that crucial level of 16,000.  Indian stocks were infected only briefly with the lunar malaise as the Sensex lost 1% in the afternoon closing at 25,617.  The Monday declines followed a negative week last week.   In last week's stock forecast, I had noted the probability of declines last week, especially towards the end of the week and the Mars-Saturn square aspect.  This assessment proved to be largely true as US stocks fell throughout the week.  I also noted that Monday's lunar eclipse would likely correspond with increased uncertainty.  That definitely proved to be the case as European and US investors are becoming more unsure about the state of the Chinese economy as the world's economic engine is showing more signs of sputtering. 

Traditionally, eclipses may have been feared because they were associated with uncertainty and interruption of the status quo, just as the light of the Sun and Moon was suddenly lost or distorted.  But eclipses may also be seen as harbingers of change, either positive or negative.  Some observers have suggested that stocks are more likely to reverse their direction around eclipses.   One study of the effects of the perigee-apogee cycle indicated that stocks are more likely to make lows at the perigee (i.e. yesterday) and highs at the apogee.  It is unknown why this might be so, although if we extrapolate from conventional symbolism we can say that the closer the Moon to the Earth, the more likely people will act in an emotional and therefore irrational manner.  But this doesn't explain why collective sentiment should be negative (i.e. bearish) rather than irrationally positive, or following Alan Greenspan, irrationally exuberant. 

Whatever the case may be, I do think we could say the odds of a reversal higher are somewhat greater now then they were last week.  Much of this global stock market swoon over the past six weeks has been associated with Saturn's aspects.  Currently, the ringed planet is getting very close to its exact alignment with Ketu, the South Lunar Node.  As a general rule, the closer alignments of Saturn are more likely to mark a bottom in stock prices.  Of course, transiting Saturn (6 Scorpio) is still sitting exactly opposite the natal Sun of the NYSE chart so that could make it difficult for stocks to rally.  Therefore, it is a complex picture with many factors operating simultaneously.  Overall, I would think we are getting closer to some kind of bottom in stock prices here, at least for the time being.  As I noted last week, Saturn is due to form a close square with Neptune late November.  This is a very difficult pairing of energies that should coincide with some significant declines.  Whether it is a mere extension of the present decline or a separate move lower is a question which I discuss in my subscriber newsletter.

I would think that Wednesday's entry of Venus into sidereal Leo ought to bring some optimism so we could see a rebound into midweek.  On the other hand, the inferior conjunction of Mercury (Rx) and the Sun on Wednesday is often negative.  Its 150 degree alignment with Neptune isn't particularly inspiring either.  That could well offset some of the Venus optimism.  Friday's Mercury-Mars alignment also looks a bit tense.   So the short term aspects this week look both choppy and volatile. The longer term aspects continue to look bad, however.

Markets left dazed and confused by Fed as Mercury turns retrograde

(21 September 2015)  Is the Janet Yellen losing her touch?  Or more to the point, is the Fed losing control of financial markets?  Most global markets declined last week after the Fed Chair chose to leave interest rates unchanged at zero percent after citing concerns over the state of the Chinese economy and iffy US data.  The usually reassuring and dovish Fed Chair left investors puzzled and anxious as she painted a more sober picture of the economy than expected.  There also appears to be growing confusion over which criteria the Fed is using to time its eventual interest rate hike.  Besides US inflation and employment data, the Fed now seems to be including China into its calculus for when the "lift off" in interest rates will finally take place after six years of ZIRP.  This was a change in messaging and left many confused about just how or when the Fed will rate hikes, if they ever do. 

In last week's financial forecast, I thought the planetary influences argued somewhat for a hike given the strong Saturn influences here.  However, I noted a possible alternative view whereby the dominance of Saturn could restrain the Fed from making any move at all out of fear of damaging confidence and crashing the stock market..  This appears to have been the case as the mood darkened on Wall St and throughout most European markets.  Besides possibly signaling a desire to tighten money supply through an interest rate hike, Saturn is also correlated with pessimism and declining markets. 

I had also noted the possibility that markets could be confused in some way by the Fed statement since Mercury turned retrograde just 9 minutes after its release.   We definitely got that in spades in the US and Europe sold-off sharply after the puzzling and disappointing statement and continued to decline on Friday.  This late week decline was therefore in keeping with my bearish predictions in my subscriber newsletter. Asian and emerging markets rose, however, as the US Dollar weakened and enhanced the appeal of those riskier assets.

Stocks appear to be rebounding so far this week.  This makes sense given the close Venus-Uranus alignment that is exact on Tuesday and Wednesday.  I would think stocks are more likely remain fairly strong into midweek.  However, the Sun conjoins Rahu on Wednesday and this could activate its alignment with Saturn so any gains could be reversed quickly. 

And as I have noted previously, the Mars-Saturn square aspect (exact on Friday the 25th) looks tense and could coincide with more selling pressure by the end of the week.  And this comes at a time when Saturn is exactly aligning with Ketu (South Lunar Node) and both will also align with the natal Sun in the NYSE chart.  There is definitely some major downside risk in that pattern.  And as if to up the cosmic ante, there will be a lunar eclipse on Monday the 28th.  Eclipses are associated with times of uncertainty and interruption of the status quo.

As we move into October, markets will likely take a break from the often difficult influence of Saturn.  However, I would note that Saturn is due to form another important aspect at the end of November, this time with Neptune.  And with Venus, the planet of money, transiting through sidereal Virgo, its sign of debilitation, for much of November, there could be more rough waters ahead.  If stock markets remain as depressed as they are now, one would think the Fed will remain reluctant to raise interest rates in October, December and even beyond.  After all, one of the tenets of the Fed in this era of interventionist central banks is to prop up stocks through any means necessary.  Let's see what the money magicians at the Fed, ECB and PBOC will pull out of their hats next.

Will she or won't she: Yellen's difficult choice

(14 September 2015) All eyes are on the Fed this week (yet again!) as investors wonder: will she or won't she?  Fed Chair Janet Yellen has been leaving a trail of fairly strong hints in recent months that an interest rate hike is coming sometime this year and possibly as soon as Thursday.  The Fed's policy statement will be released on Thursday at 2 p.m. as it reveals if the unprecedented six-year long zero interest rate policy is finally over.  Analysts and commentators are sharply divided on this question, although it seems that the consensus position is that she will leave it unchanged for a bit longer and raise it either in October or December. 

It's unclear what the market's reaction to a hike might be, although most believe it could spark some sort of decline.  That said, enough traders have already discounted the possible 25 basis point hike (yes, that's just 0.25% at the low end of the range) that any decline will be fairly orderly and perhaps even modest. 

So what does astrology have to say about the probability of a rate hike on Thursday?  The alignments I'm seeing do not look clearly one way or the other although I tend to think they lean towards an interest rate hike.  That is due in part to the prominence of Saturn in the current celestial geometry.  As I have noted for the past several months, September stood out as having significant Saturnian potential due to the exact 120 degree aspect between Ketu (South Lunar Node) and Saturn.  This is exact in the final week of September but is already effectively in aspect within one degree.  Saturn, of course, is the planet of pessimism and caution and hence it is associated with stock market declines. Saturn is also the planet of restraint and restriction so it may have a more natural affinity with tighter money, i.e. raising rates.

As a historical analogue, Saturn was also prominent back in 2004 when then Fed Chair raised rates for the first time in three years following the dot-com bubble collapse and 9/11 attacks in 2001.  On June 30, 2004 Greenspan hiked rates in what would become a three year long interest rate increase from 1% in 2004 to 6% by 2007.  At the time, Saturn (21 Gemini) was conjunct both Mercury and the Sun within a few degrees and aspected Jupiter (19 Leo) within two degrees. Saturn was also aligned with Neptune (21 Capricorn) in a 150 degree quincunx aspect.   That was also a strong Saturn-influenced pattern that may have reflected the tighter money policy that Greenspan announced that day.

While Saturn may incline collective actors towards a more cautious and fearful approach to the future, it is important to recognize that this could manifest in the Fed leaving the rate unchanged.   That is because the Fed could fear what might happen if they raised rates too soon, either in terms of a stock market crash or more economic slowdown in the US and abroad.  In that sense, this Saturnian energy could manifest in either scenario.  Obviously, this fails Popperian standards of theory falsification but it is worth noting all the same. 

Saturn is also highlighted here because Mars is approaching its square aspect with Saturn this week and next (exact on 25th September) and those two malefic planets are usually difficult energies for investors.  So not only is Saturn connected with renunciatory Ketu, it is also linked with irascible Mars.  Those are difficult aspects to be sure.  As an added shot of Saturn, tropical Saturn enters Sagittarius on Friday just a day after the Fed statement.  The bottom line is I think that Saturn's correlation with declines is sufficiently well-established that a tightening and a subsequent sell-off is the most likely scenario although I would not be surprised if things play out differently because of that alternate interpretation. 

I should also note an intriguing third possibility here.  Mercury turns retrograde at 2.09 p.m. EDT, just nine minutes after the release of the statement.  Mercury retrograde is traditionally associated with situations of confusion and dysfunction so there could be something about this statement that causes the markets to flinch in some way.   Could the Fed raise rates while at the same time promising to launch another round of quantitative easing (QE)?  Or could the Fed announce a completely new policy instrument to boost the economy that the markets can't make quick sense of?  Or more simply: could the statement be delayed?  It's interesting to think about these sorts of scenarios given the Mercury retrograde proximity to the statement release.  Or it could be nothing much at all except perhaps the market reacting in a confused way to Yellen's usual panoply of reassuring platitudes that keep the game going a bit longer.  It will be an interesting week. 

I should think stocks are likely to remain a bit jittery before the statement since Mars enters sidereal Leo on Tuesday. 

Predicting inflation: lessons from the German hyperinflation in the 1920s

(6 September 2015)  One of the financial paradoxes in recent years is why there has been no significant (official) inflation in most Western countries despite massive efforts to print money by the Fed, the ECB and various other central banks around the world.   Many observers were wary of the Fed's various QE programs to kickstart the economy after the 2008 meltdown since they believed it would cause inflation to rise to dangerous levels.  Indeed, the Fed's unprecedented QE bond-buying program was one the main reasons why gold rose to all time highs in 2011 as the traditional inflation hedge came to within a stone's throw of $2000.  As more investors realized that inflation was as tame as ever (below 2%, at least officially), gold prices began to fall back to earth.  Now gold trades close to $1100. 

There are many reasons why inflation never really got going in developed economies but perhaps the most important was that the economy was just so weak after the Great Recession, the expansion of the money supply was barely enough to even keep the economy afloat. Without it, we probably would have sunk into a much deeper depression like the 1930s.  And we may still eventually have to face the longer term consequences of all this Fed printing -- whether in the form of a disruptive round of inflation or another recession after the current bubble bursts.  Or both.

The debate over the post-meltdown recovery raises the question: is it possible to predict when periods of high inflation are more likely to occur?  For the answer, let's take a quick look at perhaps the most famous incident of inflation in modern times, the German hyperinflation in the early 1920s.  After its defeat in WW1, Weimar Germany suffered from massive debts, a depreciating currency and a dysfunctional economy.  The demand for war reparations by the Allied powers then made a bad situation worse.  Gradually, the increasingly hamstrung government began to print more and more money in order to pay its skyrocketing bills.  At its worst in 1923, inflation was running at 41% per day as the currency became worthless and all savings were wiped out.  By November, it took more than 4 trillion Marks to buy a single US Dollar.  The pre-war exchange rate had been 4 Marks to the Dollar.

As it happens, there were some strong hints of this inflationary crisis in the 1871 horoscope of Germany.   Germany's defeat in the war came during the Mars dasha period (of course!) and defeat was more predictable given the nasty Saturn square to Mars in the natal chart.  But the post-war inflation occurred during the Rahu (North Node) dasha period.  Rahu's major period began in 1919 just prices were beginning to rise sharply.   Why Rahu?  Vedic astrology holds that Rahu is acquisitive and insatiable.  Through its grasping nature, it seeks to break norms and boundaries as it relentlessly pursues narrow material gain.  This is a very apt description behind the inflationary impulse: prices begin an uncontrollable spiral as workers demand more wages to pay the ever-rising prices.  Once the vicious cycle begins, it is difficult to stop. 

What is amazing to note is that the Rahu in the Germany horoscope is in the 2nd house of money and wealth.  Moreover, it sits just two degrees from the 2nd equal house cusp (19 Gemini) thus focusing its energy even more directly on the economic situation.  Rahu isn't always bad, of course, but this Rahu is made more troublesome because of the opposition aspect from Saturn in the 8th house.  The Saturn influence raised the likelihood that Rahu's more difficult side would manifest during its dasha period.

The height of the hyperinflation occurred in 1922 and 1923 during the Rahu-Jupiter dasha period.  Since Jupiter symbolizes expansion and growth, we can understand how this combination of energies could have coincided with a damaging expansion of the money supply. To be sure, Jupiter is normally a benefic influence so one might think that its minor period could have brought more sustainable economic growth.  That's true, but here the transits afflictions were highly concentrated.  For its part, Jupiter was squared by unpredictable Uranus during 1923 at the height of the inflationary crisis.  Hard aspects of Uranus to Jupiter suggest growth or gains that are out of control.  Soft aspects (0, 60, 120) tend to be more constructive. 

But the more significant affliction was to 2nd house Rahu.  Transiting Pluto (19 Gemini) had been conjunct Rahu for several years in the early 1920.  Pluto to Rahu transits can be very difficult and reflect times of intense and painful assertions of power and coercion, and in this case, this applies to the economy of the country (2nd house).  Moreover, Saturn was transiting through the sign of Virgo from 1921 to 1923.  Thus, Saturn casts its malefic 10th house square aspect to that same 2nd house Rahu.  Saturn distorts and upsets most planets its aspects and tends to bring out more negative associations.  Under good transits, Germany's 2nd house Rahu could have delivered strong economic growth.  But with the double transit affliction from Pluto and Saturn made the economic crisis a more likely outcome. 

The moral of the story is that Germany had the potential for the inflation crisis given its 2nd house Rahu.  Both Rahu and Jupiter have symbolic connections to unrestrained growth. But it took the combination of the Rahu dasha period and several bad simultaneous transits for it to occur.   In my next post, I will examine the US and other horoscopes to assess the risk of inflation in coming years.  Many analysts still think a period of high inflation is possible, so it may only be a question of when.  If and when inflation comes again, it will be better to own gold instead of a depreciating US currency.


Weekly Market Forecast

Stocks fell again last week as more investors pondered the implications of a possible Fed rate hike later this month.  Friday's US jobs report was strong enough to keep this early hike scenario on the table.  Of course, higher rates are anathema to most stock investors these days who have reaped the rewards of the zero interest policy for the past six years.   The Dow lost 3% on the week closing at 16,102 while in Mumbai the Sensex tumbled 4% to 25,201. 

I was correct in thinking we would likely see some early week downside on the Venus-Mars conjunction.  While I thought we could see declines into Tuesday, I didn't expect the selling to be that strong.  We did see some recovery in the middle of the week on the Mercury-Neptune alignment although gains were quickly lost in Friday's sell-off. 

So it seems we are still very much in the grip of Saturn these days as it approaches its alignment with Ketu, the South Lunar Node.   I would think we will likely see stocks struggle more in the coming days and weeks, even if there are some rallies along the way. 

This week features a Mars-Uranus aspect on Tuesday which could be disruptive.   Wednesday's Moon-Venus conjunction looks more forgiving but the Moon then conjoins Mars on Thursday and this could signal more difficulty.  Friday's Moon-Jupiter-Neptune alignment could deliver a meaningful respite from the gloom.