(15 December 2013)
To taper or not to taper? That is the question -- again! With another
Fed meeting slated for this week, the never-ending debate about whether
the Fed will reduce its QE program is front and center once again.
With the employment data is showing more strength lately, will Bernanke
and Co. finally begin to reduce their bond purchases which has been one
of the main drivers of the current market rally? Or is the Fed still
concerned about a possible negative market reaction which would push
interest rates higher as happened in May and June when Bernanke first
floated the prospect of a taper? Opinion seems split on whether the Fed
will have the courage to finally start to wind down its stimulus
program. Recent weakness in the markets reflects the fact that some
investors are reducing their holdings in anticipation of a taper. A QE
taper will reduce the liquidity and will likely cause stocks to fall.
How much stocks may decline is unknowable, although it may depend on the
wording in Wednesday's 2 p.m. statement. A more hawkish tone would
suggest that the days of easy money are numbered and that the Fed is
increasingly wary of the risks of an asset bubble. Such a tone could
hit stocks hard. More dovish talk, however, and a steady-as-she-goes
message would likely push stocks higher, or at least allow them to
maintain their current lofty levels. What do the planets suggest? Last week's planetary patterns did seem to fit market moves fairly well as markets generally rose in the early part of the week on the Sun-Jupiter-Saturn alignment. I was also correct in anticipating some mid and late week turbulence as Mars aligned with Saturn -- two typically negative influences.
This week will see a plausible enough bullish pattern on Monday as Mercury aligns with Jupiter and Saturn. But that alignment will be out of range by the time of Wednesday's Fed statement. Instead, Mars will form a minor angle with Rahu (North Lunar Node). These are two normally negative energies which tend to correspond with a rise in caution and anxiety. At the same time, the Sun will align with Venus so that could offset some of the Martian negativity. Overall, this suggests something of a mixed and rather indecisive picture.
But when overlaid against the horoscope of the NYSE, one would think that the chances for some kind of negative reaction are greater as Mars conjoins Rahu in this chart while Venus will come to square the Saturn-Neptune opposition in the natal chart. The Venus station on December 21st at 5 degrees of sidereal Capricorn underlines the potential importance of this tense alignment with Saturn (5 Aries) and Neptune (6 Libra) in the NYSE chart. It needn't manifest exactly on Wednesday, however, as Venus will be more or less stationary for about the next week.
There are few certainties when it comes to the Fed and this week is no different. I don't know for sure if the Fed will announce a reduction of its QE program. Even if they do not actually taper, they could announce the likelihood of a taper in a subsequent meeting and toughen up their language. This might be enough to create some jitters in the market. The planets would tend to suggest more caution this week.
