One way to explain this apparent contradiction is the Federal Reserve.
The Fed remains the trusted backstop for Wall Street through its dual
mandate of price stability and full employment. Its commitment to full
employment allows the Fed keeps its monetary policy loose which, in
turn, supports the stock market through generous injections of QE
liquidity.
Problems emerge, however, when inflation exceeds acceptable limits
(remember the Fed's 2% target?) since it forces the Fed to finally get
serious and take away the punch bowl. Yesterday's Congressional
testimony by Fed Chair Jerome Powell affirmed his intention to finally
tighten monetary policy and combat inflation after almost two full
years of Covid-driven QE. Most observers now expect a March rate hike
as the Fed pivots from bailing out investors to serving the needs of
the average American trying to put food on the table.
Stocks are trading just a little below their highs as we approach the
Mercury retrograde station at 6.42 a.m. EST, Friday, January 14. All
things being equal, Mercury retrograde stations have a modest bearish
bias so we should expect some kind of pullback here. However, we should
note that each Mercury retrograde station is unique since the relative
condition of other planets determines the relative bearishness of the
upcoming 21-day retrograde cycle (Jan 14-Feb 4).
This particular station looks more troublesome than normal since Mercury (16 Capricorn) will be exactly square Uranus (16 Aries) and conjunct Saturn (19 Capricorn). The Mercury-Uranus is very unstable and may symbolize sudden and disruptive developments, especially pertaining to transportation and computers. This setup looks more difficult than the current supply-chain problems and could mark the start of a new challenge that causes problems for the economy. Also, the Mercury-Uranus square may signify a computer or technology outage such as a cyber-attack or malfunctioning database or undersea cable. The Mercury-Saturn conjunction is bearish, of course, and makes these more negative scenarios more likely.
The bearish effects of Mercury retrograde stations tend to linger beyond the specific day of the planetary reversal. This lingering effect seems more likely than not here given the concurrent afflictions of the Biden horoscope that I have mentioned in previous posts.
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