(24 August 2022)
Stocks look more vulnerable here in the waning dog days of summer as
inflation remains a primary concern, especially in Europe. Much of
the summer rally had been predicated on the assumption that inflation
may have peaked in the US and that this could pave the way to a more
dovish Fed that would be less hawkish in its commitment to interest
rate hikes. While US inflation has eased off somewhat, European
inflation continues to rise as energy prices have reached a crisis
level given the ongoing disruption from the Ukraine-Russia war.
But all eyes will be on Fed Chair Jerome Powell on Friday as he delivers
his annual speech from Jackson Hole, Wyoming. Powell is expected to
reveal his current plan to tackle inflation and whether or not the Fed
will to slow the pace of rate hikes starting with its next FOMC meeting
on September 21. Being creatures of liquidity, investors will be
hoping for any dovish signals from Powell, perhaps as a response to some
recent data that suggest the economy may be slowing. If, however,
Powell reiterates his commitment to reducing inflation to the Fed's long
term target of 2%, the market could sell-off on the prospect of
significantly higher interest rates down the road.
A look at the horoscope of the Federal Reserve reflects the potential
precariousness of the current economic situation. Typically, the
economy tends to do well this chart is strengthened by Jupiter and other
benefics as it reflects a Fed that is successfully managing an
economic expansion. When the chart is afflicted by Saturn or other
malefics, however, that can mean a more stressful time for the Fed and
greater economic uncertainty.
The main problem here is that Saturn (27 Capricorn) conjoins the 8th house cusp (25 Capricorn) representing obstacles, setbacks and scandals. Saturn is usually a difficult energy whenever it closely aligns with a planet or cusp and that is very much the case here since the 8th house is considered the most malefic house in the chart. Saturn is currently retrograde and is due to station direct on October 23 at 24 degrees of sidereal Capricorn. This will be just one degree past an exact conjunction with the 8th house cusp and a 150-degree alignment with the Ascendant. Regardless of the immediate aftermath of the Jackson Hole speech, it does suggest the Fed is entering a period of higher stress for the next two months or so while the Saturn alignment is in range.
The outlook isn't entirely negative, however, as retrograde Jupiter will be approaching a conjunction with the 10th house cusp (MC) in October and November. This is a very positive influence and suggests the Fed will eventually assume a more positive leadership role where it could be praised for its actions. While the Jupiter influence is very strong here, it does not override the likely damage from Saturn. No doubt, the Fed will encounter both positive and negative situations as a result of these dueling influences. I do suspect that Saturn's negative influence is more likely to manifest first since Saturn will resume normal forward motion first, while Jupiter will resume its forward motion on November 23.
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