Storm clouds ahead for the Fed?

(7 June 2015) It's a difficult road these days for Janet Yellen and her team at the US Federal Reserve.  Seven years after the 2008 economic meltdown and the beginning of its unprecedented policy of zero interest rates and then quantitative easing (QE), the US economy is still shaky.  Some economic indicators like unemployment look pretty good (5.5%) but we're a long way from where we were before the Great Recession.  GDP is struggling at 2% per year, wages haven't recovered, housing is still down, and economic inequality is greater than it ever was. Economic insecurity appears to be at an all-time high as more people are either on food stamps or living paycheck-to-paycheck.

The problem for Yellen and her colleagues is that they desperately want to claim victory over this recession and "normalize" interest rates, if for no other reason than to have some breathing room in the case the economy tanks again and they have to cut rates again.  But many economists fear that a rate hike now will stifle this fledgling recovery and cause a huge market sell-off which could have major consequences for the financial sector (e.g. pension funds).   In this sense, some analysts are suggesting that the Fed is essentially trapped in its current policy -- unable to normalize rates because of its effect on the stock market and unable to lower them any further because they are already at zero. QE4 anyone?

I raise this question of the precarious position of the Fed  because its horoscope is going to become very active quite soon.  And when the Fed's horoscope looks "active" that means it usually has to act fast in order to deal with some kind of economic crisis.  Economic crises are usually bad for the stock market.

A quick look at the Fed's chart and we can see that in late July, Uranus will station retrograde at 26 Pisces.  This will form a close square aspect with the natal Mars at 26 Gemini. The Mars placement is doubly sensitive since it is just one degree away from the Ascendant at 25 Gemini.  This aspect usually coincides with highly stressful and unpleasant situations.  The Uranus station is extra-powerful because it marks a time when Uranus will appear to be stationary in the sky, thus extending the length of time of its aspect for several weeks. 

As an added factor, Mars will conjoin its natal position just one day before Uranus makes its station.  This extra Mars layer boosts both the overall probability of a crisis-type event as well as its severity.  These interlocking alignments will take place on July 25-26th. 

By way of comparison, we can see that Mars and Uranus were also prominent in September 2008 when the Fed allowed Lehman Brothers to fail as it went bankrupt.  Uranus was almost exactly 30 degrees away at 26 Aquarius thus aspecting that natal Mars-Ascendant by trine aspect.  Mars was square the Mars-Ascendant at 23 Virgo, in close conjunction with Mercury and Venus.  Other factors ramped up the intensity of this time period too as Rahu was conjunct the 8th house cusp at 24 Capricorn and therefore also formed a quincunx alignment with the Mars-Ascendant pairing.   While the Uranus trine aspect is likely not as potent as its square aspect, Rahu's simultaneous aspect here likely made this pattern worse. 

If the 2008 meltdown was an 8.0 on the economic Richter scale in terms of its destructive capacity, this late July alignment looks less difficult.  Perhaps more like a 6.0.  Like an earthquake of that size, there will likely be some damage, but maybe not as devastating.  But it should be big enough to cause a significant rise in anxiety in financial markets.

Weekly Financial Forecast

Stocks generally declined last week as worries over Greece continued.  In New York, stocks suffered a modest 1% decline with the Dow finishing at 17,849.  India's Sensex fell harder as concerns over the monsoon and a possible delayed rate hike dampened sentiment.  The Sensex declined 3% to 26,768.   I had leaned bearish in last week's stock market forecast as Saturn alignments were somewhat more prominent.

This week looks more positive as the Sun and Mars align with Jupiter.  This alignment is closest in the first half of the week.  Thursday's Moon-Uranus conjunction also seems quite bullish.  Jupiter will aspect them both as it is now just two degrees away from its exact 120 degree aspect with Uranus.