Whither Jupiter? As the Great Benefic recedes in the rear view mirror following the previous week's rare multi-planet alignment, global markets look to be on somewhat shakier ground. Stocks generally moved lower last week as worries over China's economic slowdown and elevated energy costs forced some investors to take a breather. In New York, the Dow lost more than 1% on the week closing at 13,080 while the S&P 500 finished at 1397. It was much the same story in Mumbai as the Sensex gave back 100 points closing at 17,361 and the Nifty at 5278. This negative outcome was very much in keeping with expectations as the post-Jupiter hangover has begun to be felt. I had expected optimism to wane as Jupiter separated from its planetary brethren last week and that is pretty much what happened. The news cycle was marked by ongoing inflation worries due to rising crude oil prices as well as some troubling data coming out of China showing low growth in that country's housing market. The global economy has become so dependent on Chinese growth that any hiccups there will surely be felt around the world. And a worst case "hard landing" in China could well spark another global recession.
In the current post-Jupiter alignment phase, we should be on the lookout for more negative economic news. Fed Chair Ben Bernanke certainly had his share this week. Not only did US manufacturing and housing data come in below expectations, but the inflation-adjusted treasury yields fell below zero for the second week in a row. The so-called TIPS (Treasury Inflation Protected Securities) drew a record low negative yield on the 10-year US government bond of -0.089 in the March 22 auction. This is important because it means that more investors are willing to pay a premium (i.e. to lose money) to protect themselves from inflation down the road. Clearly, inflation is in the forefront of many people's minds as the market is trying to come to terms with the fallout of the Fed's endless attempts at easing and stimulus which devalue the Dollar and force up the price of commodities such as oil. Faced with an impending depression, Bernanke arguably had no choice in 2009 but to embark of quantitative easing, but now the chickens are coming home to roost in the form of $100 a barrel oil. Inflation is the flipside of the Fed's stimulus efforts to boost economic activity. The trouble is Bernanke is quickly running out of room to maneuver. He needs to keep bond yields low in order to promote a recovery in housing and employment, but to do so he is creating inflation. The US economy will find it difficult to absorb $5 a gallon gasoline and keep growing as consumers end up spending more of their disposable income on necessities. Bernanke is very much between a rock and a hard place, and may soon be looking for clues for his next move in 20th-century French existential plays. While it is possible this situation can continue in the short term, it looks to be unsustainable over time. Eventually, Bernanke will have to remove central bank liquidity from the system to dampen inflation or, perish the thought, actually raise interest rates. This would be negative for assets like stocks.
This week we will get another taste of this less-than-optimistic post-Jupiter climate. Jupiter is in retreat from its close aspects so that may continue to siphon off positive energy. The short term aspects are more mixed and potentially offsetting, however. Mars is still in close aspect with Rahu for most of the week which has the potential to upend expectations and exaggerate anxiety. Monday features a difficult aspect between Mercury and Saturn. At the same time, however, the Moon will form a calming conjunction with Venus. This could take the sting out of Saturn somewhat, but it is unclear if it will be enough to nullify it completely. The midweek offers up some hope for gains as Venus enters sidereal Taurus. This should produce at least one positive day, perhaps on Wednesday. Mercury punctuates the strength of Venus on Thursday with a short lived aspect so that is another possible source of bullishness. The Sun is in a nasty t-square with the Moon and Pluto on Friday so that may produce a negative bias for the end of the week. So perhaps choppy at best.
