Bernake's Fed: born under bad stars

The stock market is looking pretty fragile these days.  While it is chasing recent highs, stocks seem increasingly reliant on central bank easing rather than fundamentals based on actual economic growth.  Much of this summer rally has occurred on the assumption that QE3 or its European equivalent are not far off.  Last week's Fed minutes and Ben Bernanke's letter to the House Oversight Committee reiterated his commitment to more easing in order to boost the slumping US economy.  Some of Bernanke's talk should be assumed to be mere jawboning which all central bankers engage in.  But if stocks rally into the next Fed meeting on 13 September, then that puts a lot of pressure on Bernanke to actually come through with a tangible announcement for more stimulus. If he does not, then the market would likely decline sharply.  Even if the Fed does announce some action, there is a possibility that the market could sell off anyway as in "buy the rumour, sell the news".  This is perhaps more likely if the program comes up short of expectations in terms of size and scope.

We can get a deeper glimpse into the inner workings of the Fed by looking at the horoscope of the Bernanke's tenure.  He was installed as Fed Chair at 2 p.m on 31 January 2006.  This natal chart should reflect some basic qualities of his time as Fed Chair.  We should also be able to see some trends and events by examining transits against the natal chart.  The natal chart itself says a lot about the Bernanke Fed.  The US has suffered its worst recession since the 1930s during his term.  In fact, Bernanke is very closely identified with the recession since economic activity began to decline just a year after he was appointed Fed Chair.  We can see this recession quite clearly through the nasty opposition of Saturn to the Sun, Mercury and Neptune.  Saturn is very much the planet of recession as it symbolizes restraint, pessimism and loss.  It is placed in the 2nd house of wealth.  Ouch!  Its aspect to the Sun suggests a loss of vitality and confidence.  Even more damaging is its aspect to Mercury.  Mercury is the planet of commerce and it is doubly important in this chart since it rules the ascendant, Gemini.  To top if off, Mercury is placed in a harmful dusthana house, the 8th.  So there is really quite a bit of negative Saturn energy that flows through the whole chart.  Obviously, Bernanke's legacy will be his reaction to the recession.

Interestingly, we can see hints of Bernanke's strategy of "quantitative easing" or QE.  Quantitative easing is a form of economic stimulus whereby central banks buy debt which enables other market participants (banks, institutions, private investors) to boost economic activity through other more direct wealth-producing areas.  By entering into the debt market, interest rates are kept low and thereby make credit cheaper for prospective borrowers, and hence this should increase economic growth. But in order to buy debt, the Fed has to spend money it does not actually have.  It therefore "invents" the money and moves the debt onto its own balance sheet to be repaid at a later date.  The Mars-Jupiter opposition in the Bernanke installation chart is a perfect reflection of this spend first and ask questions later approach.  Mars represents willful action while Jupiter symbolizes wealth and value.  When there are in more harmonious aspect with each other, it suggests a prudent spending of money toward a specific goal.  But in a more difficult opposition aspect, it often means out of control or wasteful spending.  And just to extend the analogy one step further, Jupiter is closely square Neptune, the planet of illusion and dreams.  It is perhaps no coincidence that Professor Bernanke has written several academic papers arguing the theoretical case of quantitative easing as a solution to economic slowdown.

The trouble is we don't actually know if this strategy can work since it's never been tried before.  A growing number of analysts believe that quantitative easing has limited returns and may no longer have a positive effect on the economy as the debt burden grows.  A common criticism is that QE produces inflation and debases currency, in this case, the US Dollar.  Inflation has indeed spiked in various countries (e.g. India) after the Fed began its QE program in 2009 as investment money sought out higher rates of return in other jurisdictions.   US core inflation remains largely under control although commodity prices have risen substantially.   Elevated gasoline and food prices at home and abroad are a direct consequence of the Fed's QE policies.  So perhaps that Jupiter-Neptune-Mars pattern in this chart does contain some of the keys to the Bernanke tenure at the Fed.  The themes are clear enough: the huge debt burden through spending (Mars-Jupiter), the fixation on an idea of recovery through inflation  (Jupiter-Neptune), and the reliance on a theoretical idea of quantitative easing that remains largely untested in the real world (Neptune). 

This chart is also useful for seeing the various twists and turns in financial markets and the wider economy.  We can see that the meltdown in 2008 occurred when Saturn transited through Leo.  Thus Saturn would have aspected the Moon (depression), while Rahu (distortion) conjoined Mercury (commerce).  Both are very damaging transits.   The recovery began in 2009 just as transiting Jupiter entered the 9th house and therefore conjoined the Moon (expansion, happiness) and aspected the Ascendant (growth).

All eyes are on the upcoming FOMC meeting on 13 September.  Perhaps not surprisingly, we can see that there are a number of close transit hits occurring at that time.  At the broadest level, this reflects the importance of the announcement.  The close Jupiter-Mercury aspect is a very positive influence and could be seen as a possible indication of more expansionary policies.  While I am still fairly skeptical about the near term prospects for QE3, this Jupiter aspect is one piece of evidence that some kind of easing will take place.  It may also reflect the general public approval of the Fed move.  But we can also see that Saturn is highlighted at this time.  Transiting Venus is exactly conjunct Saturn on this day, and forms a larger alignment with Uranus and Pluto.  All three planets are at 13 degrees of their respective signs. Venus-Saturn aspects tend to be more difficult and often provide an outlet for Saturn's more cautious energy.  Perhaps we have equal measures of expansionary Jupiter with cautious Saturn.  Again, one can interpret these planets in a number of ways, although this does suggest a kind of balance in the Fed action.  Perhaps the easing program will be quite small.  I would also note that Saturn and Rahu are close to the degree of the Ascendant in this chart in September.  This is a more negative influence and suggests that Bernanke may become fairly stressed while these two malefic planets are in aspect to the Ascendant.  I don't want to make too much of it, however, since the Ascendant is dependent on an exact "birth" time and I am uncertain about the accuracy of the 2 p.m. installation.

Looking ahead, we can see that the next major transit hits will occur in early 2013.  Saturn will station in exact square to Sun while Ketu (SN) conjoins Mars.  This is a double whammy that is likely to mirror some very difficult developments at the Fed.  This could represent another phase of the ongoing economic crisis that may force the Fed to react quickly.    It is also possible that this could correspond with the end of Bernanke's tenure.  Mitt Romney is on record saying he will fire Bernanke if he becomes president.  These transits occur in January and February, just at the time when the new president would assume office.  While I don't think Romney will win the presidency, it is an intriguing interpretation of these difficult transits. 

But back to today's markets.  US stocks ended their winning streak last week on worries of slowing growth in China and Europe.  The losses were quite mild, however, as the Dow slipped less than 1% closing at 13,157 while the S&P 500 finished at 1411.  Indian stocks fared better on hopes of further central bank easing.  The Sensex rose less than 1% closing at 17,783 while the Nifty ended the week at 5386.   The week unfolded more or less as expected as the early week Venus-Jupiter aspect coincided closely with gains on most world markets.  As expected, the late week period was more bearish on the Mars-Rahu aspect. 

The planets this week argue for more upside as the Sun forms an alignment with Uranus and Pluto on Wednesday and Thursday.  Ahead of this pattern, there is a greater chance of some declines perhaps, although they may be fairly muted.

Apple hits all-time high ahead of iPhone 5 release

It was a fairly quiet week in the markets as trading volumes ebbed during the summer holiday season.  In New York, stocks gained for the 6th straight week as corporate earnings continued to suggest a positive outlook.  The Dow edged higher by 1% closing at 13,275 while the S&P 500 finished at 1418.  Apple shares hit a new all-time high at $648, as the market anticipated the release of the iPhone 5.  Indian markets were also bullish as investors responded to better than expected inflation data.  The Sensex climbed 2% closing at 17,691 while the Nifty ended the week at 5366.   I thought we might have seen more volatility around the early week Mars ingress into Libra and the Mars-Saturn conjunction on Wednesday.  At least the Venus aspect with Uranus and Pluto did appear to correlate fairly closely with the mid and late week gains on most global markets.

It seems that Saturn has been on its best behaviour in the early stages of its transit of sidereal Libra.  According to traditional astrological theory, Saturn is said to be exalted in this sign and hence it may be somewhat less likely to manifest its negative energy and pessimism.  That has been the case thus far, and even its conjunction with troublesome Mars has not interrupted the current stability in financial markets. The basic idea here is that planets will tend to correlate with negative market moods when they are under pressure by malefic planets.  While Saturn may have a somewhat stronger constitution here by virtue of its exalted position in Libra, it is still a potentially dangerous planet which can undergo rapid changes in its nature. Saturn's changing condition should be our focus in the coming weeks as it moves into aspect with Rahu, the North Lunar Node.

Apple's new highs provide a good illustration of the usefulness of the IPO horoscope.  Apple was first traded on the Nasdaq on December, 12, 1980 at 10 a.m.  The resulting chart is very powerful. The ruler of the 1st house, Saturn, is tightly conjunct benefic Jupiter in the 9th house of good fortune and higher knowledge.  Venus, symbolizing money and beauty is closely conjunct the Midheaven (10th house cusp) suggesting significant price appreciation over time.  The stellium of planets in the 11th house of gains is also a big plus for the stock, especially since Uranus, the planet most associated with technology and innovation, it tightly conjunct Venus and the Midheaven.  Apple is a technology company that is known for its attention to design and aesthetics, an area that is ruled by Venus.

But while the natal chart is very powerful, Apple has still had its share of ups and downs.  It almost went bankrupt in the 90s before Steve Jobs was called back to save the company.   The worst time was in 1996 when the stock price bottomed at $3.  Interestingly, Apple's bad times occurred during the Rahu dasha period.   Dashas are unique to Vedic astrology and provide a special window on the larger trends of a company.  When a company is running a dasha period of a malefic planet such as Rahu and it is poorly placed in the horoscope, then we should expect problems.  In Apple's case, the Rahu period began in 1986 and ended in 2004.  Rahu is more of a negative influence since it is closely aspected by the 8th house aspect of malefic Mars and Mars sits in the 12th house of loss.  That is a difficult energy to handle even in the best of times. The 1996 low point of near-bankruptcy occurred during the Rahu-Ketu period.  Ketu is another natural malefic that often correlates with problems.  Towards the end of the Rahu dasha period in 2003, Apple suffered through another bear market in its stock as the price fell back to $7 after rallying towards $30 in during the dot com bubble of the late 90s.  But in 2004, everything appeared to change as the Jupiter dasha period began.  Jupiter is a pretty reliable indicator of growth and this was definitely the case with Apple. Even though Jupiter is closely conjunct malefic Saturn in Virgo in the horoscope, its placement in the 9th house appears to have offset other negative influences.  The favourable placement of its dispositor, Mercury, in the 11th house of gains is another reason why the Jupiter period has been so positive for Apple stock.

The all-time high in the stock has occurred in the current Jupiter-Venus period.  This is pretty much what one would expect since Venus is perhaps the most fortunate planet and it is very nicely placed in the horoscope near the Midheaven with Uranus.  The Venus minor period began in March 2012 and will last until 2015.  This suggests that Apple stock will likely remain quite strong.  Of course, dashas are not everything and Apple will still be subject to a range of good and bad transits.   Currently, transiting Jupiter is aspecting all those nice 11th house planets in Scorpio -- Uranus, Mercury, Sun and Neptune.  So that is another source of strength for this stock.  One would think, however, that the Uranus-Pluto square will have to create some problems over the next few months since it is tightly aspecting the Jupiter-Saturn conjunction. 

The planets this week offer a mixed picture.  There are a couple of positive looking transits in the early part of the week that could push stocks higher.  Monday's Venus-Jupiter aspect will be closely followed by the Mercury-Jupiter aspect on Tuesday and Wednesday.  Wednesday therefore becomes a potential dividing line as the Mars-Saturn conjunction will be joined by the Moon.  The Moon could act as an immediate trigger for some negativity or it may act as a cosmic marker for a possible reversal point.  I would note that the late week has some fairly nasty looking aspects including Mars-Rahu on Friday and a Sun-Neptune opposition on Thursday and Friday.

Bad is good: stocks rise on easing hopes

Financial markets engaged in a bit of economic schadenfreude last week as stocks rose against a backdrop of weaker than expected data coming out of China.  The weak industrial production and export numbers meant that a slowdown was more likely in China and around the world.  But in our current upside down world, slowing growth increases the likelihood of more money printing by the Fed and the ECB in the form of QE3.  In this way, bad numbers can actually be good for the market.  Since 2009, investors have come to rely on the interventions of central banks to inject liquidity into the system and thus free up the amount of capital available for loans and economic expansion.  While this bit of counterintuitive logic may seem a bit perverse in the long run (i.e. let's borrow even more money to solve our debt problem!), the short run is all most markets care about at the moment.  And the short run fear is that global growth may be stalling and a new recession could be just around the corner. Therefore, markets are responding favourably to any means to prop up asset values, no matter what the long term consequences may be. 

In New York, the Dow rose about 1% on the week closing at 13,207 while the S&P 500 finished at 1405.  Indian markets were also higher as the Sensex added 2% closing at 17,557 while the Nifty ended the week at 5320.  This bullish outcome was in keeping with expectations as the Mercury-Venus-Neptune alignment was exact midweek.  The Mercury-Venus pairing is usually bullish anyway and the Neptune influence only added to the stability of the up trend.

Stocks have been quite resilient in August thus far, despite the move of Saturn into sidereal Libra.  I had thought we might have seen more downside by now but so far, only Saturn's more responsible side has manifested.  Like all planets, Saturn has different symbolisms, some positive and some negative.  When Saturn is favourably disposed, it can support responsible behaviour and slow and methodical growth.  Perhaps that absence of any easing last week from the ECB and the Fed was a reflection of this upstanding side of Saturn.  But stocks have not been filled with the usual amount of Saturnian pessimism.  One possible explanation is that Saturn is actually considered "exalted" in the sign of Libra and hence it will tend to produce more positive outcomes.  I don't quite believe this exalted status of Saturn is enough to deny its inherently pessimistic nature indefinitely, but it is one possible reason why markets have remained afloat in the early stages of its transit of Libra. 

When Saturn comes under more pressure, we will see how strong its exalted state really is.  This week will be an important test in that respect as Mars conjoins Saturn on Wednesday the 15th.  Mars and Saturn are the two most malefic planets of the solar system so there combination here is definitely one to watch.  Mars could start off the proceedings as early as Tuesday as it enters Libra.  Such Mars ingresses often tend to be bearish.  I would also note, however, that Venus forms a potentially positive alignment starting on Wednesday and lasting until Friday. So there could be some moves higher around this Venus energy, especially if the market has fallen beforehand.  It should be quite an interesting week.