Cyprus bailout calms markets

(31 March 2013)  Stocks moved higher yet again last week as an 11th-hour bailout deal was struck and thereby avoided the worse case scenario from occurring in Cyprus.  Under the terms of the deal, large depositors with savings over $128,000 will lose 60% of their money to a special tax designed to rebuild the crippled Cypriot bank sector.  Using arbitrary and confiscatory taxes on depositors seems like strange way to rebuild confidence in ailing banks.  In any event, US stocks inched higher as the Dow finished the week at 14,578 and the S&P 500 set an all-time record close at 1569.  Indian stocks were also modestly bullish as the Sensex gained 100 points closing at 18,835.   The week unfolded more or less as we expected.  I thought the triple conjunction of the Sun, Venus and Uranus on Thursday and Friday would likely push up prices in the second half of the week and that is what happened.  I also noted the presence of a potentially troublesome Mars-Saturn aspect on Monday which could coincide with declines.  This also proved to be the case on most global markets.

So what next for the markets?  With US stocks making new all-time highs, many observers are wondering if it is a good time to take profits as some kind of pullback or consolidation is more likely.  To be sure, the "double top" pattern is one that is often correlated with significant declines.  This is precisely what happened in Indian markets in November 2010 after the previous 2008 high of 21,000 on the Sensex was matched.   Once the old high was reached, stocks sold off sharply in 2011 and have yet to regain their previous levels.

The current planetary picture would tend to support the notion that stocks are risky at these levels.  After making a series of key aspects in the past three months, Jupiter is finally moving away from its exact angle with Pluto.  This is the last (for a while) in a series of aspects that began with the Jupiter-Uranus aspect in January.   Financial astrology asserts that Jupiter is a bullish influence and that its aspects are often correlated with a rising market.  With Jupiter now apparently weakening as it separates from its Pluto aspect, the risk of some kind of decline would seem to be rising in the weeks ahead.  Jupiter will again form significant aspects with other slow moving planets (i.e. Saturn to Pluto) in June but between now and then, the bullish energy will have to come from some other planetary source.  This is still possible since close aspects between other outer planets (e.g. Pluto and Chiron) can be bullish but they may be less reliably positive for the markets. 

This week may be dominated by the planet Mars.  Mars forms an aspect with Rahu, the north lunar node, on Wednesday and then aspects Mercury and conjoins Venus on Friday and Saturday.  Mars is considered a malefic planet by nature that can sometimes coincide with frustrating and anxious situations.  In financial terms, its aspects tend to correspond with declines although we should note that numerous exceptions abound.  Monday's Sun-Jupiter aspect could be bullish but the unchecked and volatile energy of Mars may be something we have to watch out for the much of the week.

Transits for Mumbai Wednesday, 3 April 2013 9.00 a.m.

Bank crisis in Cyprus puts markets on edge

(24 March 2013)  Stocks showed more signs of weakening last week as the banking crisis in the tiny island nation of Cyprus emerged as the latest threat to the Eurozone.   US stocks slipped early in the week but largely recovered by Friday as the Dow closed unchanged at 14,512.  Indian markets had a tougher time as the RBI announcement of a cautious 25 point rate cut disappointed investors.  The Sensex fell more than 3% closing at 18,735. 

This outcome was in keeping with expectations as we noted the likely bearish influence of the early week Mercury-Mars aspect.   The late week rebound after Wednesday's reassurances from Ben Bernanke for more easy money was also in keeping with expectations as Friday's Mars-Uranus conjunction coincided with enthusiastic buying.  The ongoing slump in Mumbai throughout the week was somewhat more attributable to specific alignments within the BSE horoscope.

The latest EU banking crisis in Cyprus has financial markets on edge all over the world.  If an acceptable bailout package is not found, it could destabilize European banks as depositors may decide to withdraw their money rather than be hit with a tax as happened suddenly in Cyprus.  Even if the current bailout plan is implemented, it is unclear what will happen in the days and weeks to come.  If Cypriots begin to withdraw savings from the banks out of a fear of more deposit taxes or simply out of spite, it could spark another round of uncertainty in financial markets.

The latest crisis in the ongoing EU drama is plausibly reflected by the position of the planets with respect to the Euro horoscope, dated 1 January 1999 at midnight.  For several months, I have been warning about the possibility of significant trouble in Europe in early 2013 due to the simultaneous aspects from transiting Pluto and Saturn to the natal Sun in the Euro chart.  Pluto has been conjunct the Sun for many months now while Saturn is currently forming a close sextile/3rd house aspect to the Sun.  The combined energies of these two malefic planets have again undermined confidence (Sun) in the Euro and have resurrected long-simmering questions about the viability of the Eurozone. 

Based on my reading of the key astrological influences, I think the crisis in the Eurozone will get much worse between now and 2016.   The most intense period of the crisis will probably be in 2015 and 2016 and will probably involve a fundamental recasting of the whole Eurozone.  A break-up is possible with weaker members removed and one cannot rule even out complete dissolution.  More immediately, we can see how the natal Mars in the Euro will be activated by transiting Mars, Venus and Sun in early April.  These are a series of tense-looking transits and is likely to coincide with more difficulties which could again cause some tremors in financial markets. 

This week the planets actually looks somewhat positive.  Thursday's Sun-Venus-Uranus conjunction is quite a bullish trio, and given the close alignment of Mercury, Jupiter and Pluto, there is good reason to expect some upside this week.  The early week is perhaps more of a question mark given the aspect from Mars to Saturn on Monday.

Transits for Thursday 28 March 2013 9.00 a.m. Mumbai, India

 

US stocks climb to new record high: is this a bubble?

(17 March 2013)  As the Dow continues to set new all-time highs, one may well ask if we are in the middle of a financial bubble.  Financial markets continue to look quite robust here as the Fed's QE3 program into virtual perpetuity has seemingly removed all risk from the stock market.  With no quick end in sight to QE3, investors are only too happy to follow on Ben's lead and pile into stocks.  Much of the post-2009 stock market rally is rooted in central bank programs to free up liquidity and encourage investment in risky assets such as stocks.  This has deliberately punished savers and rewarded debtors by pushing down interest rates close to zero.  After all, who wants to buy a government savings bond if the interest rate is only 1 or 2%? 

We hear more critical voices questioning the long term wisdom of the Fed's zero-interest rate policy as fears of a new bubble are growing.   While skeptics abound, it seems now that Ben Bernanke will not permit the stock market to fall as it is too closely tied to the economic well-being of the US economy.    If the Fed continues QE3 and maintains low interest rates into the foreseeable future, then should we all just dump all our money into the stock market and forget about it?   Most people would agree that rule #1 of investing in the stock market is:  don't fight the Fed.  If they are lowering interest rates and keeping them low, then it makes sense to have money in stocks.   But markets are becoming very sensitive to possible changes in Bernanke's commitment to QE3 and ZIRP.   If unemployment should keep falling, then that would hasten the Fed's exit from the market since it has a target rate of 6.5%.   With Bernanke scheduled to make his latest pitch for the bubble economy this Wednesday (March 20), investors will be sensitive to any hint at all that the bond buying program may be winding down. 

But there is another potential warning bell that deserves our attention.   That is the rate at which investors are willing to buy US Treasuries, irrespective of Bernanke's machinations and manipulations.  Although the bond market has been distorted by the Fed's regular purchases, investors are still buying bonds at rates that broadly reflect the current level of risk and reward.  As long as these rates remain low, then Bernanke and his central banker friends are free to do whatever they want to keep the bubble inflated.  But as soon as rates start to rise, he will have a problem.  The massive debt levels in the US and Europe are only manageable as long as rates stay abnormally low.  The 10-year Treasury currently yields just 2% -- still very close to its historic low of 1.45%.   If these yields should start to rise towards 3%, then it may well be panic stations at the Fed, the ECB and indeed most central banks around the world.   It will be a sign that investors are getting nervous about the world's huge amount of debt and the inability of most nations to pay any of it back. 

US stocks rose for the fourth straight week last week as investors focused on more signs of a growing economy against a backdrop of Fed largesse.  The Dow gained about 1% closing at 14,514.   Indian stocks retreated, however, as inflation data came in a little on the high side thus weakening the case somewhat for a significant rate cut from the RBI this week.  The Sensex lost more 1% closing at 19,427.   I had taken a wait-and-see approach last week given the absence of any major short term aspects.  It is worth noting, however, that Monday was generally bullish worldwide on the Moon-Venus conjunction just as one would expect given the fact that both are benefic planets.  Tuesday was also more bearish as the Moon aligned with bearish Mars and Uranus.  I had also suggested that Friday leaned bearish given the opposition angle between the Moon and pessimistic Saturn.  This correlated nicely with the markets as we saw a small decline on Wall St. that day and a somewhat larger pullback in Mumbai.

The current rally in stocks may well continue until the end of March as Jupiter is set to make its exact aspect Pluto on March 29.  This will be the last exact Jupiter aspect for a while.  Without Jupiter in the mix, the market is more likely to experience problems since it is the bullish planet par excellence.  This is not to say that the market will be set to fall on March 30 but it is important to note that this positive influence will soon begin to recede. 

This week looks like a mixed bag as the early week looks dominated by a Mercury-Mars aspect in the early part of the week.  Since Mercury is barely moving after the conclusion of its retrograde cycle, this aspect has that much more punch and ability to inflict damage on sentiment.  This aspect is close to exact on Tuesday, the same day that the RBI makes its interest rate announcement.  By itself, I would say that the presence of this aspect does not make a significant rate cut (e.g. 50 points) more likely.  If anything, the mood may well be more cautious and anxious.   Bernanke is slated to speak on Wednesday after this aspect has begun to separate, so perhaps his remarks will fare somewhat better in terms of market reaction.  Friday's Mars-Uranus conjunction looks quite potent although the rest of the planets seem fairly positive.  I would therefore be reluctant to predict any significant disappointment after Wednesday's Fed meeting.  If anything, the market may well continue its upward march.

Transits for Tuesday 19 March 2013  9.00 a.m. Mumbai

Berlusconi gains influence amidst uncertain Italian election

(3 March 2013)  Financial markets took a hit last week as Monday's Italian election did not produce a clear winner.  Even worse was the fact that anti-austerity parties including the one led by disgraced former Prime Minister Silvio Berlusconi vowed not to co-operate with the party headed by pro-EU candidate Pier Luigi Bersani.  It may take days or even weeks before a working coalition is formed.  If no coalition can be cobbled together, we can look forward to another election in short order and yet more political uncertainty.  Most global markets fell sharply early in the week as investors contemplated the real possibility that Italy may sink back into its economic morass and thereby drag down the rest of Europe with it.  US markets recovered by week's end, however, as the Dow closed modestly higher at 14,089.   It was a different story in Mumbai, however, as investors gave Thursday's budget a lukewarm response as no new growth policies were announced.  The Sensex lost 2% on the week closing at 18,918. 

The week unfolded largely as expected as I noted how the early week alignment of Mercury, Mars and Rahu (North Lunar Node) looked troublesome and increased the likelihood of some kind of fallout over Italy's election.  This proved to be correct.  The recovery later in the week also roughly corresponded with the bullish Venus-Neptune conjunction.  While this was not the case in India due to local peculiarities of the budget, it is worth noting that stocks were higher on Thursday up to 11 a.m. before the budget was released.

The Berlusconi Effect on the markets is a fascinating one.  Given his track record of scandal and financial incompetence, his new-found political strength may well be toxic for markets.  The closer he gets to power, the more frightened the investment community becomes.  Berlusconi rejects the austerity program implemented by outgoing PM Mario Monti He also wants to do away with various new tax measures that seek to increase government revenue.  This has proven enormously popular as it appeals to the public's desire to avoid economic pain, no matter how short-sighted or irrational it may be.  Berlusconi is a politician, after all, and not a banker.   His job is to get elected and this is usually accomplished by telling people what they want to hear, not what may be in the best interests of the country. 

Given his revival, it is perhaps not surprising that Berlusconi's horoscope shows considerable strength at the moment.   Focusing only on the simplest and more compelling influences, we can see that Jupiter and Uranus are in close aspect to his Sun-Mercury conjunction in the 1st house.  This has boosted his public profile enormously in the past several months.  We can see that Jupiter and Uranus are both moving very slowly here and hence their positive influence is protracted.  Jupiter stationed at 12 Taurus at the end of January in a very tight aspect to his Sun (12 Virgo).  This is a classic combination for success, achievement, and recognition.  Although we are more than one month after that direct station, Jupiter has only moved two degrees and remains very close to this Sun.  Even as it separates from the Sun, it delivers more strength to Berlusconi via its aspect to his natal Mercury at 16 Virgo.  Bunga-bunga, indeed.   The dashas are also favourable to him as Venus-Mercury began in late 2012.  Both planets are natural benefics and both look to be quite well positioned in his natal chart as both are in their respective home signs.  For all these good influences, though, Berlusconi didn't win the election and seems unlikely to become the next Prime Minister according to most commentators. 

I do not have a strong enough sense of his planets to make a clear prediction either way.  I would say, however, that the planets do favour him for much of the month of March.  Just how far he can go with these influences is another question.  It certainly wouldn't surprise me if he was named PM once again.  The Jupiter-Uranus combination is one of the most potent ones a person can have in their chart.  But I would tend to think that he won't make it all the way to PM.  But it may be that the benefit that Berlusconi receives from this aspect is an ability to maneuver behind the scenes to arrange key cabinet members that better reflect his interests.  The puppeteer returns to power behind the scenes.  The short term aspects this week appear to favour him even more.  We can see that the Moon, the 11th lord of gains, will be conjoined by the Sun, Venus and Mercury at various times.  These are all positive influences that load the dice in his favour.  Things are likely to go his way this week and perhaps into next.  Perhaps his party will emerge the winner in the Senate, or the coalition will have significant representation from his party.  One potential trouble spot is Rahu's close aspect with natal Saturn.  Saturn is strong in the 6th house, so this may simply reflect the shadowy or surprising (Rahu) competitors and enemies he has to contend with at the present moment.   It may also weaken his health somewhat since Saturn rules the 6th house (Aquarius).  

So Berlusconi is likely to be a winner in some way from these elections as Jupiter will aspect Mercury in the coming weeks.   However, if we look further down the road, we can see that transiting Saturn will eventually station at 10 Libra in July.  This will be just three degrees away from his Venus and just one degree from Venus' node.  This is a difficult influence that suggest troubles involving women, which is perhaps not surprising given his history of public womanizing.  But Pluto and Uranus will also be forming hard aspects to his Mercury (16 Virgo) around the same time.  This is probably not good either, especially since Mercury rules the 1st house.   His progressed chart is also very afflicted (not shown) so it seems that Berlusconi will suffer a major setback in the summer.  If there happens to be another election at that time, he is almost certainly going to do poorly.   He may also have more health concerns on these transits, given his relatively advanced age.

The planets this week again offer more possibilities for declines, albeit mixed in with some good aspects.   Monday's Venus-Jupiter aspect could coincide with some upside but by Tuesday, Mars will enter sidereal Pisces and thereby join Uranus.  This is not a stable pairing of energies.  Mars-Uranus aspects can produce sudden or shocking events, and for this reason they are associated with market crashes.  The conjunction is quite wide here so I tend to think we aren't in crash territory and likely won't be.  But it is a burden on the early week.  The midweek could go either way as Mercury conjoins Venus on Wednesday and into Thursday.  This is normally a bullish combination but this time they form an alignment with Saturn and Pluto.  Any alignment with Saturn increases the possibility of declines.  It is by no means a sure thing -- few aspects are in financial astrology -- but it opens the door to more declines.  It will be interesting to see if those midweek aspects that look good for Berlusconi end up being negative for the markets thus reaffirming his profile as a contrarian indicator.

Transits for Wednesday 6 March 2013 9.00 a.m. Mumbai