Merkel blinks at EU summit; markets rally

Europe backed away from the abyss yet again as Friday's EU summit produced another bailout to solve its ongoing debt crisis.  Germany's Angela Merkel is widely seen as the loser in this struggle between southern debtors and northern creditors as Germany accepted the demands of Italy, Spain and France to share their debt burden.  Now the European Central Bank will be able to buy Spanish and Italian bonds as a mean to keep a lid of interest rates.  The ECB will also oversee an EU-wide banking regulatory agency in order to stem the banking crisis.  Spain's teetering banks will receive an injection of €120 Billion directly from the European Stabilization Mechanism (ESM), which is the latest incarnation of the EU's bailout fund.

Global markets cheered the news as the US stocks rose sharply and posted a 2% gain on the week.  After a mostly negative week, the Dow closed at 12,880 while the S&P 500 finished at 1362.  Indian stocks also shook off the doldrums as the Sensex climbed more than 2% closing at 17,429.  The Nifty broke above resistance and ended the week at 5278.  From an astrological perspective, the summit deal was a very appropriate reflection of the Uranus-Pluto aspect.  While I thought we might have seen a little more disruption and uncertainty in the run up to the deal, I did expect some kind of resolution to the crisis last week.  The twin stations of Venus and Saturn are often associated with market reversals so we did see an interim bottom in US and European markets.  And as I noted in last week's post, the Uranus-Pluto square aspect was indicative of some kind of fundamental disruption with the status quo and pointed to some major changes ahead.  As it happened, we did see the beginnings of a new EU emerge as a result of this summit, as the member states have forged an agreement towards closer integration.  The EU did not just throw more money at their problems but rather created a new banking regulator to ensure sounder lending practices in the future.  Also, Germany finally agreed to allow the buying of Eurozone debt by the ECB.  This had been a major sticking point since the Germans did not want to let their indebted members off the hook without strict austerity.  The EU may now be slowing evolving beyond a simple currency union into a more tightly knit economic and political federation.

Despite Germany's dominant position in the EU, it is widely seen to have caved into the demands of the other members in the interest of long term viability of the Eurozone.  Perhaps it was no coincidence that Germany also lost to Italy in the semi-finals of the European football tournament on the same day that the EU summit deal was struck. These patterns of fortune and luck tend to operate on many levels, perhaps as a reflection of planetary movements.  For her part, Angela Merkel is in a difficult spot these days as Saturn is stationing in close aspect to her Sun.  This can be an oppressive influence which lasts for many weeks due to the slower than normal motion of Saturn around its retrograde cycle.   Saturn transits to the Sun can erode self-confidence and drain the vitality of a person to take the initiative.  Merkel may well have simply lacked the fortitude to assert herself in the face of a more organized opposition from France, Italy and Spain.  From an outcomes perspective, Sun-Saturn transits tend to simply deny the wishes of a person and force them to accept less than they wanted.  It is a tough transit for everyone, even powerful leaders of large countries.  The fact that Merkel's Sun is tightly conjunct Uranus and square Neptune probably makes Saturn's influence that much more oppressive since more planets are involved with the transit affliction.

We can also see her probable frustration during this summit through the exact Mars square transit to her natal Mars.  This is usually a tough influence to handle and often correlates with unworkable situations, anger, and victimization by others.  It has been reported that Hollande (France), Monti (Italy) and Rajoy (Spain) essentially ganged up on Merkel and held the Germans hostage to their demands for debt sharing. With that strong Mars and Saturn influence in Merkel's chart, it was quite likely that their efforts would be successful.  Saturn's continuing slow velocity for the next month or two suggests that Saturn will continue to exercise a negative influence on Merkel over the summer. I would be particularly concerned of the effects on her when Mars and Saturn conjunct on or around 15 August.  This conjunction will form a very close square aspect to her Sun so she is more likely to confront intense and challenging situations around that time.

This week looks like we could see some follow through to Friday's rally.  Saturn's negative influence is receding here a bit as it moves forward while Venus will form aspects to Uranus and Pluto by midweek.  Mercury will join that favourable alignment on Tuesday and Wednesday so that is another potential source of optimism.  The early week conjunction of Jupiter with Ketu (South Lunar Node) may be somewhat unsettling, however, so that could correlate with some profit taking, perhaps on Monday.  Wednesday's US holiday closing suggests that gains may be more likely to occur on Tuesday or Thursday.

Markets disappointed by Fed's extension of Operation Twist

Stocks generally moved modestly lower last week as the Fed disappointed some investors by extending Operation Twist. In New York, the Dow lost less than 1% closing at 12,644 while the S&P 500 finished at 1335.  In Mumbai, Indian stocks were mostly flat as favourable cues out of Europe shored up sentiment after the RBI decided to leave rates unchanged.  The Sensex ended the week 23 points to the good finishing at 16,972 while the Nifty closed at 5146. 

While I thought we might have seen a little more downside on the strength of the two Saturn aspects in play, the week unfolded more or less as expected.  I thought the early week Venus aspect could reflect a relative calm after the Greek election result and that is essentially what happened.  While the post-election relief rally quickly fizzled, at least the doom and gloom scenario of a anti-bailout Syriza win did not come to pass. I thought that the downside was more likely to arrive after the Wednesday Fed meeting and indeed the market sold off after Bernanke chose the more conservative option of Operation Twist instead of QE3.   This coincided nicely with the bearish Mercury-Saturn aspect and we got a big decline on Thursday with gold and oil also participating.

Europe remains the focus of the financial world this week as its leaders will meet in summit on Thursday and Friday.  Opinion is divided over whether they will  be able to deliver fresh solutions to the debt crisis, or even if the market needs them to do so.  Few are expecting a comprehensive program to emerge from the meeting, but the markets would like to see something tangible that goes beyond the usual boost in the size of the ESM and EFSF bailout plans.  It is fascinating to see how the current financial crisis is reflected in the planetary geometry.  Bearish Saturn is about to station and return to normal forward motion while disruptive Uranus makes its exact square aspects with power-hungry Pluto this weekend.  These are clearly troubled times in the financial world and the planets are echoing that reality.  Even more interesting is how the current crisis bears a resemblance to the European banking crisis of 1931.  At that time, there was a similar crisis of excess debt that bankrupted many banks in Europe and around the world.  Bank runs were common in 1931 as Austrian and Germany banks became insolvent in the face of an ever deepening depression.  It is not coincidental that we see some of the same planetary aspects then as we do now.  In 1931, there was also a rare Uranus-Pluto square aspect in play.  This wasn't quite exact yet, but it was still within just one degree.  It is worth pointing out that this Uranus-Pluto square aspect occurs only once every 70-80 years and the last time is happened was 1931-1933.  The planetary picture in the early 1930s was considerably darkened by the aspect from Saturn that formed a t-square with Uranus-Pluto.  Saturn is less prominent this time around as we can only point to a weaker 8th harmonic aspect, but it is still there.  This is perhaps one reason why the crisis so far has not been as bad as the 1930s. Of course, the Uranus-Pluto square lasts a long time so it will be in effect until 2014.

Transits for 1 August 1931

This week could bring some important new developments.  The Uranus-Pluto square is exact on Sunday and may be activated the Sun's transit on Friday the 29th.  This will form a very tense t-square aspect and could release some of that disruptive and disorderly Uranus energy. Since this happens on the same day that the EU summit is wrapping up, it is tempting to think about possible scenarios that could correspond to the symbolism of this aspect.  Since it does look tense, this would tend to support the view that the EU does not solve its problems this week.  Perhaps this means that pro-austerity Merkel holds out against all the calls by Hollande, the IMF and the ECB to stimulate the European economy.   And yet since these aspects are so close to exact, it also seems plausible that this week will bring some kind of resolution.  The markets may react negatively at first, but there is some reason to expect at least a temporary solution to come forth.  Before Friday's t-square, Saturn turns direct on Monday while in a very tight and potentially negative aspect with Venus.  For its part, Venus also turns direct on Wednesday, so this is another reason to be extra cautious here.  Planetary stations generally represent increases in energy which can accompany major developments and adjustments.  They are also partially correlated with reversals in market direction.

 Transits for Friday 29 June 2012 9.30 a.m. New York

Greek election pushes Europe to the brink

The Eurozone debt crisis has reached its latest climax as Greece prepares to vote in an pivotal election on Sunday.  Historian Niall Ferguson is calling it the financial equivalent of the Cuban Missle Crisis.  A win by the leftist Syriza party could generate dire consequences for the Eurozone and the world's financial system.  Syriza has vowed to reject the austere EU bailout plan that was agreed upon last year.  If the bailout package was abandoned,  the EU's loans to Greece would soon end and the country would default on its debt in a matter of weeks. This would likely force several large European banks into insolvency since they are larger holders of Greek debt.  It would also hasten the departure of Greece from the Eurozone.  The most recent polls show Syriza in a tight race with the right of center and pro-bailout New Democracy party.  A win by New Democracy would be seen as positive for the Eurozone and would be cheered by financial markets.

This kind of high drama is precisely the sort of thing we were expecting here in June as a number of major planetary patterns are reaching their maximum intensity.  As I have noted previously, June stood out as a potentially tumultuous time because of the simultaneous occurrence of two fairly rare events.  First, there is a square aspect between Uranus and Pluto.   These distant planets are rarely in aspect with each other but when they do, big things happen.  Both planets are symbolically associated with change, albeit different types. Uranus tends to reflect situations of sudden and radical change which seek to establish independence and novelty.  It is seen as a planet of revolution.  Pluto's change is no less profound, but tends to change more deliberately and thoroughly through the exercise of power and manipulation.  When these two planets combine their energies, it can correspond with periods of major social upheaval.  The last time these two planets interacted was in the mid-1960s when society was undergoing a major social and cultural revolution.  It is worth noting that that was a conjunction.  The last time there was a Uranus-Pluto square aspect in the sky was in the early 1930s during the depth of the Great Depression and the rise of fascism and the welfare state.  The square aspect is seen as more difficult and disruptive than the conjunction so we need to be mindful of the possibility of some serious developments during the next two to three years.  Due to the slow velocity and retrograde motion of these planets, this aspect will be in effect until approximately 2015.  From now until then, there will be three exact aspects, the first of which occurs next week on 24 June.  

The second rare planetary pattern upcoming is a Saturn direct station on 25 June (yes, just a day after the Uranus-Pluto square!) while in a close 135 degree aspect with Venus.  Saturn is best understood as the planet of pessimism and caution.  Its station marks the end of its four-month long retrograde cycle as it reverses direction from backwards to forwards.  Saturn is therefore more powerful at this time and has more ability to do harm and weaken confidence.  To top it all off, Venus itself will end its retrograde cycle on Wednesday the 27th and this will also be an additional source of energy. 

So the planets are very much reflecting the intense and historic nature of the events on Earth at the moment as the world may be teetering on the brink of another financial disruption that could set off a chain reaction with unpredictable consequences.  Of course, we want to know what the outcome will be to all this intense build-up of energy.  Will we return to a state of relative calm in the aftermath of the Greek election or will the situation worsen after a negative result?  To state the obvious, there is no clear scientific way to interpret the impact of planetary patterns.  Have the negative effects of the current aspects already manifested in the form of uncertainty and the recent weakness in the Euro and the markets?  Or are more negative manifestations likely in the near term?  It's hard to say for sure, but my sense is that these aspects should coincide with more difficult situations for Europe and the financial markets in the coming days.  Given the nature of the planets involved in these aspects, there is a rising possibility for more serious outcomes.

Stocks rose last week as the IMF promised a coordinated central bank intervention in the markets in the event of an unwelcome result in the Greek election.   In New York, the Dow was higher by more than 1% closing at 12,767 while the S&P 500 finished at 1342.  Indian stocks also rose on hopes of an RBI rate cut on 18 June.  The Sensex rose more than 200 point closing at 16,949 while the Nifty ended the week at 5139.  While I was somewhat ambivalent, this bullish outcome was not surprising as I thought the presence of the favourable Mercury-Venus aspect could well push stocks higher overall. 

This week appears to have Saturn in the driver's seat as it forms aspects with Mars and Mercury. Saturn aspects are usually bad news for markets since it tends to reflect caution and disappointment.  The Mars-Saturn aspect is exact on Monday but since it is a minor aspect it may be less damaging.  More troubling is the Mercury-Saturn square aspect on Wednesday and Thursday.  This is a bearish influence can could coincide with some significant disappointment.  Given the Fed meeting on Wednesday, there is a greater chance that investors will be disappointed in what Bernanke has to say.  Perhaps he will not be announcing any QE3 or an extension of Operation Twist.   The early week also features a fairly nice looking configuration of bullish Venus with Uranus and Pluto.  That is one astrological reason why we may not see a huge sell-off on Monday and the possibility for a status quo result in Greece.  At the same time, it is important to note that if the election is close, it may be several days before we know who will be leading the government as the parties attempt to cobble together a coalition.

Stocks rise on hopes for Spanish bailout

Stocks enjoyed their best week of 2012 on indications that some kind of solution could be found to the Spanish banking crisis.  In New York, the Dow climbed more than 3% closing at 12,554 while the S&P 500 finished the week at 1325.  Indian markets fared even better as the Sensex rose more than 4% closing at 16,718 while the Nifty ended the week at 5068.  As expected, most of the gains occurred midweek around the Sun-Venus conjunction and the Mercury-Jupiter aspect.   Monday's tense Mars-Venus aspect coincided with some significant bearishness, although markets generally rebounded before the close.

Spain's banking crisis reached a critical point last week as talks are now underway for an EU bailout.  The IMF estimates that Spanish banks may need up to €40 Billion to cover their loan losses. While bond yields have backed away from the precipice, they remain elevated above 6% reflecting their significant credit risk.  The enormity of the European financial crisis cannot be underestimated as it threatens to bring down the global economy. President Obama's re-election chances are closely affected by the crisis since the state of the US economy is the central issue in the upcoming November vote.  As Europe goes, so goes the US.  Not surprisingly, Obama encouraged European officials to do whatever was necessary to prevent the crisis from getting out of hand.  

Common sense would suggest that a solution will be forthcoming very soon, and the market rally last week reflects this reasonable expectation.  No matter how divergent the interests of the key players, the seriousness of the problem should compel policymakers to arrive a workable plan.  Failure to do so could spark a Lehman-style panic that we saw during the meltdown in 2008.  But not all solutions are created equal, so there could be a range of market reactions to whatever the final agreement will be.  The EU has faced similar crises in the past two years and have always managed to come up with something, although these tended to be temporary solutions that only postponed the inevitable day of reckoning.  We may well get another postponement type of package this time around. 

The trouble with all these sensible expectations is that they do not fit with the planetary picture at the moment.  Basically, the planets don't look good right here so I am expecting some kind of disappointment or surprise to throw a wrench into all those best EU intentions and economic rationality.  It could be that the bailout package is underwhelming and the markets decline in reaction.  Or it could be that the bailout is welcomed by all parties, but then Greek voters elect an anti-austerity government on 17 June.  Greek remains the wild card here since an anti-austerity vote would force the EU to implement radical firewall measures to prevent the banking crisis from deepening.  With Saturn and Venus due to station in the last week of June, I would say the markets will have to run the gauntlet in the aftermath of the Greek election.  And with the disruptive Uranus-Pluto square in the mix, there is the potential for some fundamental changes to the financial system.  As we know, nothing is certain in this world, much less astrology, but the planets here are suggesting a situation of rising risk.

We will get a taste of the effects of the Uranus-Pluto square early this week as Mercury forms an alignment with that pairing on Monday.  This t-square pattern is usually negative. The Sun and Saturn also form an aspect in the early week which could be problematic, especially for gold.  Perhaps gains are more likely midweek near the Mercury-Venus aspect, although this does not look particularly strong. Oil may receive a boost this week from the transit of the Moon in Pisces.  Even if the market ends higher this week, it may well be temporary.

 Transits for Monday 11 June 2012 9.30 a.m New York

Recession on the way? US jobs report disappoints

The world economy took a turn for the worse last week as signs of a slowdown threatened to halt the recovery in its tracks.   India's GDP growth of 5.3% in the first quarter was the lowest in a decade, while the US economy created only 69,000 new jobs in May, falling far short of expectations. With no solution to the Eurozone crisis in sight, fear is on the rise here as US Treasury yields hit record lows with the 10-year note now below 1.5%.  Things have got so bad that investors are willing to forgo any return in favour of safety as yields are now below the level of inflation. 

Fear?  Slowdown? Threat of a new recession?  Let me guess -- Saturn!  As the planet that symbolizes the glass half-empty, Saturn is usually highlighted in some way during times such as these when optimism is in short supply.  Indeed, Saturn's strength has been increasingly over the past several weeks as it formed a tight aspect with stationing Venus just as it entered sidereal Virgo in mid-May.  This kind of clear Saturn aspect activity is frequently correlated with negative economic outlooks and falling stock markets.  Saturn's penchant for gloom and doom was even more likely to strike a chord at the current time because there was no offsetting positive influence from Jupiter. 

Saturn looks likely to remain dominant over Jupiter for a while longer as it approaches its direct station on 25 June. At that time, Saturn will conclude its four-month long retrograde cycle at 28 degrees of Virgo and resume its normal forward motion.  Saturn stations are often times of heightened anxiety, especially if the station occurs in aspect with another planet.  This is very much the case here as it will form a close conjunction in the Ashtamsha varga chart (8th harmonic).  In Western astrological terms, this is a 135 degree aspect.  Interestingly, Venus will also end its retrograde cycle just two days later.  This will likely greatly increase the prominence of Saturn and therefore there will be additional risk for more bad news and more declines in the stock market.  If that weren't enough, the first square aspect between Uranus (change, eccentricity) and Pluto (power, restructuring) occurs in the same week and should ratchet up the risk level.  All this rare planetary interplay could produce some major developments, both financially and geopolitically.  It might even coincide with a significant new policy that addresses the ongoing Eurozone crisis, such as Eurobonds or some functional equivalent that underwrites all sovereign debt. It can't come fast enough to deal with Spain whose 10-year bond yields have now crept up to 6.7% -- almost to that all-important threshold of solvency at 7%.  Unlike Greece, however, Spain may be too big to bailout. Some commentators are now openly considering the possibility that Spain could leave the Euro and return to the peseta.

Given all the gloomy news last week, investors bailed out of stocks and most risky assets and ploughed their money into treasuries, gold and the US Dollar.  In New York, the Dow lost almost 2% closing at 12,118 while the S&P 500 finished at 1278.  The sell-off wiped out all the gains of 2012 as the pullback morphed into something more like a correction.  Stocks in Mumbai also fell as FII outflows underscored the difficult investment environment in India.  The Sensex lost 2% closing at 15,965 while the Nifty ended the week at 4841.  This negative outcome was broadly in keeping with my generally Saturnian expectations here, although the extent of Friday's decline was surprising given the apparently favourable Mercury-Venus conjunction.  Previous aspects played out more according to script as the market did climb early in the week on Tuesday's Moon-Venus aspect and also retreated in time for the midweek Mercury-Mars aspect.

This week looks more mixed with the early week looking a little tense on Monday's Venus-Mars square. Actually, this is part of a larger alignment of Sun, Venus and Mars that does not look supportive of confidence. All three planets are fairly close together so that may complicate how the energy is expressed.  If the aspects do manifest sequentially, then Monday could well be bearish with some relief on the Venus-Sun conjunction on Tuesday.  This is not high probability though given the presence of the disruptive Mars aspect in the mix. The midweek looks better for a rebound as Mercury is in aspect with Jupiter. Interestingly, this may coincide quite closely with the scheduled meeting of the ECB on Wednesday.  Perhaps they will announce something that the market can cheer.  Friday's Sun-Mars aspect looks less positive, however.