The broken BRICS and India's uncertain future

(28 July 2013)  Are the BRICS really broken?  There has been a lot of talk recently about declining growth in emerging markets especially in four largest countries collectively known as the BRIC nations (Brazil, Russia, India, China).  South Africa was recently added to the original four.  A new article by Ruchir Sharma of Morgan Stanley has suggested that the BRICs time in the spotlight may now be over after shining so brightly in the 2000s. China's double digit annual growth is now a thing of the past, and Brazil is seeing widespread social unrest against a backdrop of rising inflation and economic stagnation.  Russia is riddled with corruption and remains an undiversified oil-based economy.  Like its fellow BRIC brethren, India has seen its growth rates moderate from 9 percent down to 6 percent this year as struggles with inflation and inadequate infrastructure are formidable obstacles to sustainable economic growth. 

What does the future hold for India?  Are its recent setbacks merely very normal growing pains as an economy undergoes a process of maturation?  Or is the current phase of sluggish growth a warning signal of more significant problems to come as development is blocked by poor infrastructure and a political system that is ill-equipped to deal with long-term challenges? 

A look at the horoscope of India provides a unique window on this question.   We can see that India gained independence in 1947 during its Saturn dasha.  For most of its first forty years, Indian adhered to a somewhat socialist model of development which emphasized protectionism, price supports, and a highly regulated marketplace.  This Fabian approach supposedly protected the bulk of the population from the vagaries of the free market and reduced inequality.  However, it also also dampened entrepreneurship and innovation and produced very slow growth.  It also did little to reduce endemic levels of poverty throughout the country.   Perhaps it is not surprising that this socialistic model should have been followed during Saturn's dasha period since that planet is said to symbolize the broad mass of the population, especially in the democratic sense of "the people".  Saturn is also generally seen as a difficult energy where growth comes slowly if at all and austerity is favoured over spending.  And at the risk of stretching the planetary metaphor too far, Saturn is the planet of planning and orderliness -- a very apt reflection of the preference for a statist planned economy replete with many nationalized industries. 

India's political elites finally changed course in 1991 as the economy was liberalized and opened up to more competition.   Economic growth increased significantly as a result of this new initiative as hundreds of millions of people joined the middle class.  Interestingly, liberalization occurred at the beginning of the Venus dasha (1989-2009).  Venus is a very different influence than Saturn as it typically emphasizes enjoyment, luxuries, money and pleasure.  Venus is a benefic planet and its dasha periods are often times of greater happiness, enjoyment and expansion.  This is a very appropriate description of what happened to the Indian economy at this time as the consumer sector exploded with the newly-minted middle classes buying all manner of automobiles, electronics and real estate.   It is worth noting, however, that liberalization has done little to improve the lot of the bottom third of India's population.  This may be a reflection of the condition of Venus in the natal chart which is tightly conjunct Saturn.  Saturn tends to enforce limits and moderate prosperity, even when it is associated with a benefic planet like Venus.  In this sense, the more difficult position of Venus in the India horoscope may be one reason why the mostly positive Venus dasha period did not produce more growth than it did.  As has been well-documented, India has lagged far behind China during its liberalization phase.

The Sun dasha began in 2009 and will run until 2015.  We can see that the Sun is in a somewhat mixed condition in the chart as it is closely conjunct Venus and Saturn.  The Venus influence is mostly positive but Saturn tends to make things more difficult.  The Sun is slightly malefic in nature and its rulership of the 4th house mitigates some of that negativity.  This mixed picture is perhaps appropriate given the nature of economy in the past few years.  While India has rebounded quite well from the 2008 economic meltdown, the recovery has been uneven.  Inflation is still a problem as is the increasing current accounts deficit and the falling rupee.  The stock market rebounded from the depths of 2008 but it has gone mostly sideways for the past two years and has not been able to break above the all-time high set in January 2008. 

The current situation offers the possibility of some guarded optimism.  Since May, the Sun-Mercury dasha has been running and this will remain in effect until March 2014.  Mercury is generally supportive of economic growth since it rules commerce although its its ability to do good is moderated by its presence in the 3rd house with Saturn and Pluto.   From the perspective of the dasha periods, we could see moderate growth and measured progress in the near term. 

The problem, however, is with the transit chart.  Saturn is currently transiting sidereal Libra.  This sets up an ongoing square aspect to all of those planets in Cancer in the Indian national horoscope.  This is generally an unfavourable influence, especially since it aspects Mercury, 2nd house lord of wealth, Venus, the 1st house lord and karaka of wealth and happiness and the Sun, which represents the government and vitality of the nation as a whole.  This Saturn transit will be in effect through all of 2014 and presents a very significant astrological impediment to growth and renewed confidence in the future.  For the next couple of months, Saturn will be squaring the natal Mercury so this may depress commercial activity and cause transportation and communication problems.  The presence of this very difficult transit over the next year when the dasha period is mixed at best suggests that India is unlikely to resume its breakneck pace of economic growth in the near future.  The best-case scenario would appear to be more muddling through. 

Looking further ahead, the Moon dasha begins in 2015 and will run for 10 years until 2025.  Like the Sun, the Moon is in mixed condition in the horoscope.  Its placement in the sign of Cancer is very auspicious and denotes a greater capacity for positive outcomes.  However, the close aspect from Ketu is problematic here and suggests the Moon dasha may be volatile.  Moon-Ketu aspects can bring about sudden changes and generally are not conducive to periods of stable and strong economic growth.  While gains are still likely, growth may be uneven and interrupted and may cause anxiety and uncertainty, both for the economy and the political system. 

The bottom line from this admittedly very brief overview is that India's horoscope suggests that uncertainty and uneven economic growth is more likely to be the norm in the next ten years.  Part of this moderated growth may be explained in terms of "regressing to the mean" after several years of very high growth.  However, I suspect that the Indian economy may have to cope with additional burdens that make it unlikely to repeat its early honeymoon period of the 2000s when it entered the BRIC club.

On financial markets last week, US stocks held steady as corporate earnings reaffirmed faith in the recovery.  The Dow was unchanged closing at 15,543.  Indian markets fared worse, however, as earnings disappointed against a backdrop of Asian slowing.  The Sensex tumbled 2% closing at 19,748. 

The planets this week look somewhat more exciting than last week.  This is perhaps not unexpected anyway as Ben Bernanke is scheduled to speak on Wednesday after the latest FOMC meeting and there is the July jobs report due on Friday which could impact when the Fed decides to taper its QE bond purchases.   Monday's Sun-Saturn aspect offers the possibility of some bearishness in the early part of the week.  The midweek tilts a little bullish as Venus forms an aspect with Pluto.  The late week looks more  significant, however, as Mars squares Uranus (bearish) on Thursday and Friday just as it approaches an aspect with Venus (bullish) and Rahu (bearish).  There is quite a bit of energy in this pattern although it is not readily apparent which direction it could move markets.  However, I am generally cautious around any alignments that involve Mars and Rahu since both planets are malefics.

Is the game rigged? Bernanke comments push stocks to new record

(21 July 2013)  Is the game rigged?  After yet another reassurance from Ben Bernanke last week that the Fed will do whatever is necessary to stimulate the economy and boost job growth, one may wonder if the stock market will ever go down again.  After all, stocks have risen by more than 150% since their low in 2009 in no small part as a result of the Fed's loose money policies.  Whenever markets have shown signs of falling back into the depths, Bernanke has stepped in with the latest version of quantitative easing (QE) which aims to reduce interest rates and thereby push more money into riskier assets such as stocks.    Even if QE hasn't done that much to improve the US job market, it has been a bonanza on Wall Street.  Bernanke's pledge last week helped to boost stocks last week as the Dow finished at another all-time record of 15,543.  Indian stocks also did well as the Sensex edged higher to 20,149. 

The gains were not surprising given the presence of the Jupiter-Saturn-Neptune alignment.  While I thought we might have seen a little more caution creeping into the markets late in the week, the overall result mostly confirmed our understanding of the bullish effects of Jupiter when it forms geometric exact angles with other planets.   The dominance of Jupiter is also a reason why commodities such as gold and oil have also been recently rising in price.

While the markets are likely rigged to some extent, many of the ups and (occasional) downs are still reflected by the ongoing movements of the planets.  If stocks have generally been rising for the past four years, it is because the planetary alignments have been more more positive.   That means that bullish planets like Jupiter have been more prominent in its aspects than bearish planets like Saturn or Ketu (South Lunar Node).  In that sense, no matter how much Bernanke and his Wall Street buddies are trying to pump up stocks to keep the whole thing afloat, the entirety of the game should be reflected in the planetary geometry.  That is the theory anyway. 

As I noted last week, however, there is a time for every season.  Jupiter will not enjoy its current predominance indefinitely.  While we can see it will form some aspects with Pluto, Rahu and Uranus in August, it is unclear just how much of a positive effect that can have on stocks.   That is because Saturn is due to move back into the limelight as it is due to conjoin Rahu (North Lunar Node) in mid-September.   The Saturn-Rahu conjunction is a meeting of two naturally malefic energies which is likely to increase pessimism and caution, even to the point of irrationality.  Saturn has a fairly good track record of pushing stocks lower so this upcoming conjunction is definitely one to watch. 

Aside from the transit effects (Saturn conjunct Rahu) it is also useful to examine just where the conjunction will land with respect to the key natal charts.  The chart of the New York Stock Exchange (NYSE) is sometimes instructive in this regard.   As a general rule, when malefics like Saturn form close angles (0,45,90,120,180) with the position of key natal planets in this chart, the market is more likely to decline, other things being equal.  When Jupiter forms angles with those natal points, the market is more likely to rise.  It goes without saying that these are not perfect correlations but rather probabilistic ones with margins of error that should be respected.  

Saturn will conjoin Rahu (True Lunar Node) on September 16th at 14 degrees of sidereal Libra.  Due to the previous retrograde motion of Saturn in the spring, we can see that Saturn transited this same point in April.  US stocks suffered a small 3% pullback in April which culminated an interim low on the 19th.  Saturn was less than one degree away from its exact 180-degree opposition aspect to Venus at the time of this low.  Venus is a planet that symbolizes buying and assets and the aspect from Saturn suggests a restriction or loss of value.  As a possible objection, we should note that the exact opposition occurred about a week later when stocks were already rising again.  The lesson here is that planetary aspects are best understood as having a certain window of influence.  While the theoretically strongest influence should occur when the aspect is exact, the fact is that all the other planets are part of the equation also and these can augment and shift the effects of the primary aspects.  Collective sentiment therefor reflects the totality of the interconnections of all nine planets, as well as all the other lesser asteroids, stars and comets that astrologers usually omit for reasons of brevity and parsimony.

So what is interesting here is that Saturn will return to that exact same spot at 14 degrees of Libra opposite Venus in September as it resumes its forward motion.  This time around it will be joined by Rahu (North Lunar Node).  Rahu is perhaps somewhat less malefic in nature than Saturn as it symbolizes acquisitiveness and greed.  When it is associated with a positive planet, Rahu can actually coincide with gains in confidence and therefore increases in prices.  But that is not the case here.  A more likely interpretation is that Rahu's tendency to exaggerate and distort will end up making Saturn's cautious and reserved nature more problematic than it otherwise would be. 

However much the stock market is being rigged by the Fed or manipulated by Wall Street insiders, there is some reason to think that the recent run of new all-time records and stunning returns may be interrupted by September.  No matter how powerful Ben Bernanke is, I would argue he is not more powerful than Saturn.  Of course, Saturn's aspects come and go, while the Fed's loose monetary policy appears to be eternal.   That could give the Fed the temporary advantage in this respect, or at least until the next Saturn aspect. 

This week could be a little more mixed as malefic Mars passes its conjunction with Jupiter on Monday.  However, there is a fairly nice looking alignment of Sun-Moon-Venus with Neptune on Wednesday that offers some hope and optimism.

Bernanke backtracks on taper; stocks move to new highs

(14 July 2013)  Ben Bernanke has once again proved that the Fed is the stock market's best friend.  The Fed Chair's magic words that the zero interest rate policy would remain in place indefinitely put investors in a buying mood as the worrisome taper talk faded into the background.  No doubt Bernanke was still in damage control mode after his June musings about reducing bond buying created a headlong rush to the exits.  While financial markets are certainly relieved that the Fed's free money will continue to flow, one wonders how long it can last.  The Fed's experimental stimulus plan (QE) is now into its 4th year and has boosted stocks and other financial assets around the world in the wake of the financial meltdown of 2008. 

The trouble now is that the Fed may be trapped.  Markets have become addicted to the $85 Billion of treasuries it buys every month so that any hint that this money will not be forthcoming causes investors to freak out.  This is what happened in June when Bernanke suggested that bond purchases would be tapered if the economy continued to recover.  With every bond buy, the Fed's balance sheet becomes that much more indebted as even invented money still leaves a trail of red ink. 

We can see how Bernanke's tapering comments on June 19 may have been reflected in some close aspects in the first trade horoscope of US Treasuries (Aug 22 1977).   The Sun-Jupiter conjunction had conjoined the natal Jupiter suggesting a kind of maximum faith and trust (Jupiter) which would then be increasingly subject to deterioration.  The exact aspect therefore introduces new vulnerabilities as the favorable energy begins to wane.   Both Saturn (11 Libra) and Neptune (11 Aquarius) were in a stressful alignment with the Moon (12 Scorpio) which can symbolize erosion and weakness (Neptune) and negativity (Saturn).   Mars (20 Taurus) and Rahu (22 Libra)  were also in close aspect with natal Rahu (22 Virgo) suggesting sudden and abrupt developments (Mars) that caused disruption (Rahu) in the status quo.

How long can the Fed go on buying bonds in this way?  To be sure, it can do it for a long, long time since the US Dollar is the world's reserve currency and the rest of the world still regards the US as the main driver of the global economy.   Eventually, the debt will become so large that non-Fed buyers of US debt will start to demand a premium as the risk of default rises.  Bond yields will then move higher and the Fed will lose control of the market.  As we know, higher interest rates tends to depress economic activity and could spark another major recession.   So it may be a question of when the day of reckoning will come.  If Bernanke goes ahead with the taper in late 2013 and early 2014, the stock market decline and subsequent economic recession could come next year.  But if he keeps the QE program is in place longer, Bernanke can delay the inevitable, assuming the bond market keeps its trust in US debt.  The current bubble in asset prices will remain in place as long as interest rates remain low, say below 3% on the 10-year treasury note.

Bernanke's jawboning generally boosted stocks across the board last week.  US markets rose by almost 3% as the Dow closed at an all-time record of 15,464. Indian stocks also climbed about 3% for the week as the Sensex finished at 19,958.   I thought we might have seen more downside in the early week on Tuesday's Sun-Mercury conjunction and the Saturn station on Monday.  Indian stocks were more tentative in the early week, although the US market drifted higher.

It seems that the current up trend is linked to the approach of Jupiter's exact aspect with Saturn and Neptune.  Jupiter is typically a bullish influence and its 120 degree aspect to Saturn and Neptune does broadly fit with the recent rally.  This aspect will be closest on Wednesday this week after which Jupiter will begin to separate.  This will tend to reduce the extent of optimistic sentiment and could coincide with some sober second thoughts amidst the risk-free euphoria engendered by Bernanke's policies.  Saturn's upcoming conjunction with Rahu, the North Lunar Node, in September is another potential obstacle for the financial markets.

Crude oil spikes after Egyptian coup

(7 July 2013)  The Arab Spring took a bit of a detour last week as Egypt's first democratically elected president was deposed in a military coup.  Mohamed Morsi and his pro-Islamist government lasted barely a year before the Egyptian army took matters into their own hands.  While military coups are usually seen as inimical to legitimate rule, this coup was quite popular and was welcomed by cheering crowds all over the country.  The instability in the Middle East caused a price spike in oil as crude moved above $100 for the first time since early 2012.  Although Egypt doesn't produce much oil, it does control the Suez canal which is the shortest route for Persian gulf oil bound for Europe.

Egypt's 1952 horoscope shows the outline of the current situation as both Mars (violence, military involvement) and the Sun (government, leaders) are under significant affliction by slow moving planets.  Transiting Rahu (21 Libra) is bearing down on its conjunction with Mars (18 Libra).  Rahu-Mars combinations are classic indicators for violence, especially in the mundane sphere.  More broadly, Rahu symbolizes unboundedness and when it combines with Mars' penchant for the sudden release of energy, one often sees situations that are beyond control.  It is also worth noting that Egypt's horoscope is currently running the Mars-Sun dasha period which began June 2.  This makes both the Mars and Sun transit hits by Rahu and Saturn that much more sensitive and prone to produce unstable circumstances. 

Transiting Saturn (10 Libra) is just days away from its direct station and thus is it more powerful than usual.  It forms a tight square aspect with the natal Sun, which typically symbolizes government.  Since Saturn is associated with loss and destruction, this is a fairly apt influence for a time when the president is removed by military means.

The chart for crude oil also provides a hint of the current price spike as a result of this geopolitical instability.    Transiting Saturn is conjunct the Moon-Saturn conjunction in this chart while Jupiter is moving into a close 120 degree aspect with this pairing.  To be sure, the Saturn transit seems less amenable to gains since it is usually a negative influence but Jupiter is often bullish. 

Transiting Ketu (21 Aries) is closely conjunct Venus (19 Aries) here and suggests volatility in both directions.  Ketu and Venus are disposed by Mars, the ruler of Aries, and Mars was transiting very close to the Ascendant of this horoscope at 29 Taurus.   Mars tends to create more energy when it makes contact with significant points in a chart as it does here.  While usually bearish in its effects, it can also be involved with gains when other chart factors (e.g. Jupiter) are more active.   Jupiter's aspect with the Moon-Saturn conjunction will be exact this week and then begin to separate.  This could remove one of the positive influences behind this recent price increase in oil.

Stocks generally rose this week, especially after Friday's US jobs report which surprised to the upside.  The Dow climbed more than 1% to 15,135.  Indian stocks also did fairly well as the Sensex added 100 points finishing at 19,495.  I had been ambivalent about last week given the density of aspects in play, especially early in the week.  These turned out to be mostly positive.  I thought we might have got more downside late in the week on the entry of Mars into Gemini.  Actually, the results were more mixed as stocks rallied in the US and India (but not in Europe) but gold and risk currencies such as the Euro fell sharply.

This week features the culmination of the Saturn retrograde cycle on Monday.  While we have seen weakness in recent weeks in many markets with the approach of this station, it is unclear what the effects will be of this reversal in Saturn's direction.  Markets can sometimes mimic changes in direction in slow moving planets such as Saturn, although the correlation is still fairly low.  On that score, Uranus is due to begin its retrograde cycle next week so that is another potential pivot for sentiment.   Tuesday stands out this week as the Sun conjoins retrograde Mercury.  This tends to be negative for stocks as Mercury is said to be combusted by the proximity of the Sun.  With Rahu's aspect to both Sun and Mercury also in play here, there is some potential for sizable moves.