US government shutdown hammers markets

(25 December 2018) The US government shutdown is just the latest development to sideswipe the stock market.  The month of December has seen the Dow lose 4000 points as investors are re-evaluating their risk appetite against the background of an increasingly chaotic White House.   Markets fell in early December as hopes dimmed for a US-China trade deal and then selling accelerated last week after Fed Chair Jerome Powell issued an unexpectedly hawkish statement about rate hikes in 2019.  Then on Friday the US government shut down due to a disagreement over funding for the US-Mexico border wall, a key Trump election promise.  President Trump has now made a bad situation worse through his repeated criticisms of the Fed Chair Powell and his stated desire to fire him.  

All this chaos and uncertainty was too much for many investors as they rushed to the exits rather than waiting for a happy ending to the latest episode of The Trump Show.  In last week's post, I mistakenly thought there was a plausible case for some upside following Wednesday's Fed meeting.    However, I didn't have high confidence in that forecast given the presence of some significant offsetting energies.  The Full Moon of Saturday the 22nd was a potential red flag in that respect as Full Moons tend to coincide with periods of market weakness. 

But now that the Full Moon is behind us, what are the prospects for the stock market?  In the short term, a lot will depend on when the US government shutdown will end. While I haven't made a thorough study of US government shutdowns, one astrological pattern I have noticed is that Mercury tends to be destabilized at the time of the shutdown.  One main reason is that Mercury rules the 10th house (Virgo) of government in the USA national horoscope (6.30 p.m. 4 July 1776).  When it is afflicted by transit, government is more likely to be dysfunctional in some way. 

We can see that Mercury (3 Cancer) is currently conjoined by transiting Rahu (North Lunar Node).  Rahu is often a disruptive influence as it is associated with interruptions of the status quo and the seeking of new solutions, irrespective of consequences.  As it happens, we have another disruptive influence now, as Uranus (4 Aries) forms a 90-degree alignment with Mercury as well.  In Western astrology, Uranus has similar symbolism of sudden changes and upsets, especially when in hard (90,180) aspect to other planets.  So that is a double dose of disruption and dysfunction for Mercury-related activities such as government.  And we should note that since commerce and stock trading are also in the purview of Mercury, its affliction here aptly reflects the current sell-off in the markets.

We can also see that Mars, the planet of conflict and frustration, was front and center at the time of the shutdown on Friday night as it exactly squared its natal position at 0 Gemini.  The fact that Saturn (16 Sagittarius) is now opposite all of those Gemini planets, especially Jupiter, is not helpful for any speedy resolution to the entrenched animosity in Washington. 

By way of comparison, we can see some similar patterns at the time of the famous Clinton-Gingrich shutdown in November 1995.  Amazingly, the Lunar Nodes and Uranus are again aligned with Mercury.  This time Rahu is square to Mercury within one degree while Uranus is exactly opposite Mercury.  The 1995 shutdown only lasted for five days but marked the beginning of a very dysfunctional period in US politics as Republicans sought to undermine the Clinton presidency at every turn.  Indeed, there was a second shutdown just four weeks later that lasted three weeks.

But while there are some planetary correlates for a shutdown, it is less clear how to spot a resolution.  The 1995 shutdown ended as the Sun and Mercury aligned with Rahu and hence with natal Mercury.  The apparent completion of the Rahu-Mercury energy by the Sun and Mercury could be seen as positive, although there were no obvious benefic aspects in play.  Similarly, the end of the second shutdown on January 6, 1996 lacks clarity.  Mars had just moved past its opposition aspect to Mercury a day or two prior as if to signal a level of maximum frustration.  Once it moved past Mercury, the shutdown ended.  I would have expected some benefic transit involving Jupiter or Venus to symbolize a level of peace and cooperation between the two sides.  But it's not really here.

This time around we can spot an interesting parallel with Mars.  Mars will align with Rahu and that natal Mercury on Wednesday and Thursday this week.  On the face of it, this is a negative influence on the USA's Mercury which is likely to translate into more downside in the markets.  And yet if the 1995-6 shutdown patterns hold true here, Mars will only have move a little past Mercury for the negativity to diminish and for a resolution of the shutdown to occur.  This could mean a resolution is possible as early as Thursday-Friday this week, although I would not say I had high confidence in that expectation.  It seems more likely that next week's alignment of Venus and Mercury with Rahu-Mercury is a safer and more prudent position to take for timing of the end of the government shutdown. 

In market terms, I would think we could see additional declines Wednesday but Thursday looks more positive, even if it may not signal a formal shutdown deal.  The upcoming Jupiter-Neptune alignment in January suggests that a significant rebound is approaching.  All of which suggests we are probably getting very close to a bottom in the markets, even if it proves temporary.

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The Fed's Jay Powell: Santa or Scrooge?

(17 December 2018)  All eyes are on Federal Reserve Chair Jay Powell this week.  Given recent volatility in financial markets, this Wednesday's FOMC statement and press conference will be more carefully watched than usual.  Up to now, Powell had indicated a preference for raising rates in December and then several more times through 2019.  This path of "interest rate normalization" was intended to keep inflation under control to avoid overheating the strong US economy. 

But recent economic data have been more mixed and could force the Fed to rethink its approach.  The US housing sector is showing signs of slowing, and global growth is also looking weaker as China may be compelled to undertake yet another stimulus program.  And then there are the financial markets themselves. 

While it is not an explicit part of the Fed's mandate, it is clear that a falling stock market undermines the "wealth effect" which can thereby dampen investment and business activity.  And since the stock market is sitting precariously on key technical support levels (SPX = 2600, Dow = 24,000), the market may force the Fed's hand.  More than a few observers are now calling for the Fed to save the market by either cancelling its widely telegraphed December hike, or more likely, to dial back its hawkish plan for three or four hikes in 2019, to two or even just one. 

So will Fed Chair Powell be Santa or Scrooge on Wednesday?  And more to the point, how will the market react?  His personal horoscope looks a little stressed but nothing too major just yet.  Mars is aspecting his Moon by the full strength 8th house aspect but that may simply reflect the enormous personal stress Powell is under given the historical significance of this rate decision.  Rahu (North Lunar Node) aspects the natal Mars but it is past exact and thus likely diminishing in its influence. 

As a general rule, I would think that if the market sells off sharply after Wednesday, it should show up in Powell's chart since it is unlikely that he would desire this kind of outcome.  Of course, we cannot know for sure what Powell and the Fed really wants, since a sell-off would at least push more investors into bonds thus lowering yields.  Lower rates on the burgeoning US debt could be very much what want the Fed ultimately wants, but perhaps not at the expense of all those 401Ks.

Therefore, we can say that Powell's horoscope doesn't really provide evidence for a bullish or bearish outcome this week.  I think Powell is likely to become more frustrated and depressed in 2019 as Saturn closely squares his Virgo Moon.  This will likely reflect the bear market that I can see emerging in 2019. 

But for now the transits similarly seem somewhat mixed.  For the bulls, Mercury conjoins Jupiter on Friday and could well correspond with a favorable reaction to the Wednesday Fed statement.  And yet there is reason to be cautious in this assessment.  First, the Mercury-Jupiter conjunction aligns closely with Saturn.  This introduces a somewhat more negative spin on the proceedings, even if it doesn't quite push the needle over in the bearish column. 

The other big problem this week is that we are approaching a Full Moon on Saturday, the 22nd.  Full Moons tend to be bearish so it could be more difficult for markets to rally before the Full Moon takes place.  The market declined at the time of the October and November Full Moons so there is some risk this could happen again. 

But I would think a bullish outcome is boosted because of the multi-planet alignment with Venus.  Venus is in a 120 degree alignment with Neptune (within one degree) and Venus also aligns with the Lunar Nodes, Chiron and the Sun if we include multiples of 15 degrees.  While the bullish case is less clear than I would like, all those Venus aspects are hard to reconcile with a negative market reaction the Fed on Wednesday.  It therefore seems more likely that stocks will rise after the FOMC meeting.

So even with the planetary overview, there remains considerable uncertainty about what will happen this week.  But my reading of the planetary influences should make bears uncomfortable as the net effect looks more bullish than bearish, even if I won't be surprised either way.  Using a 0-100 financial astrology index, I would say the index is greater than 50 this week, probably in the 60-70 range, especially after Wednesday at 2 p.m.  The early week could be more negative. 

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Stocks rise on 90-day US-China trade truce

(3 December 2018)  Stocks are poised to rally further on Monday after the weekend agreement by the US and China to delay the imposition of any possible further tariffs by 90 days.  This truce in the trade way is the latest piece of good news for financial markets after stocks bottomed out during Thanksgiving week.  Since then, investors have also cheered the Fed's more dovish comments indicative of fewer interest rate hikes for 2019.  A more gradual return to normal interest rates would be welcome by heavily indebted companies and consumers alike. 

This strong rebound is not too surprising from our astrological vantage point.  To be sure, I had expected some downside at some point during the Mercury retrograde cycle (Nov 16 - Dec 6) and that has come to pass given the final dip we saw into the US holiday week on Nov 23.  But Mercury retrograde cycles are usually not all bearish and so we have seen a rebound last week and this week has also started on a bullish foot.  As I had forecast in my weekly subscriber newsletter, last week's triple conjunction of the Sun, Mercury and Jupiter was very likely going to coincide with a rally of some size.  I wasn't sure how strong it would be but it certainly looked bullish.  (N.B. Readers will have to excuse my absence from this space over the past few weeks as I have been busy while doing some travelling.  I have kept publishing the newsletter during this time but could not write posts on the website.)

As far as this week goes, the rally today seems appropriate given the Moon-Venus-Uranus alignment.  As an added plus, this lines up nicely with the Ascendant-Descendant of the NASDAQ horoscope.  This horoscope is a good proxy for US markets as a whole.  And yet the planets for the rest of this week suggest that stocks are less likely to extend their gains towards the end of the week.  The problem is that Mars conjoins Neptune while both are in a 90-degree alignment with the Sun.  This introduces a downside risk that has been absent for the last week or so.  It needn't always manifest as a decline since multiple planet alignments are less predictable than two-planet alignments, however. 

But an additional bearish factor here is that the Sun is conjunct the natal Mars in the NASDAQ horoscope.  This increases the probability of a pullback this week.  The other alignment I am watching is the Mercury direct station on Thursday and Friday.  By itself, this is neither bullish nor bearish.  But the station will occur in an exact 120 degree alignment with Rahu, the North Lunar Node.  This is a destabilizing influence on collective psychology where expectations and analysis may be distorted or disrupted.  Therefore, this increases the risk of some downside this week also. 

Of course, the technical analysis of the market suggests that a pullback is likely quite soon.  The S&P 500 has reached its previous interim highs from mid-October and mid-November.  While it is possible stocks will just continue to power higher, a pullback at the 2800-2820 level is more likely.  Futures are pointing to an opening at that level so we shall see how strong the Moon-Venus influence is.

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