Wall Street Weather

If Geithner Goes, So Must Bernanke

2009-11-19T23:20:00.002-05:00

Published by WallStreetWeather.net
There has become an increasing clamor that has reached a fervent pitch this week as a handful of Republicans and Democrats are calling for Treasury Secretary Timothy Geithner to resign.

Yesterday Rep. Peter DeFazio (D-OR) called on Geithner to resign. Testifying today before a Joint Economic Committee hearing on financial regulatory reform, Geithner was verbally assaulted by Rep. Kevin Brady (R-TX), who accused Geithner of being responsible for every economic woe plaguing America today. Geithner stood his ground while trying to keep his temper under control, pointing out that the Obama Administration for the most part is dealing with the fallout from the excess spending and economic policies of the last eight years.

I did not think Timothy Geithner was qualified to be Treasury Secretary, nor did I think National Economic Council Director Lawrence Summers deserved to have a key role in the Obama Administration either since both contributed to the laissez faire policies that precipitated the financial crisis. As I’ve written so many times, you can’t solve the problem with the same policies and people who contributed the problem! Besides, it did not resonate with President Obama’s campaign of “change we can believe in.” However, to have members of Congress speak in such a disrespectful manner to a Treasury Secretary shows that there is a deeper problem that goes beyond the nation’s economic ailments. And from a geopolitical perspective, it shows that certain members of Congress are putting their own political interests before the nation’s best interests as they have failed to consider the impact their melodramatic displays of immaturity have on our economic relations with other countries.

The Treasury Secretary was correct in responding to Rep. Brady that his perception was not “fair and accurate.” To blame Geithner for every economic ill is ludicrous and the politicians attacking him know it. No one person – Republican or Democrat – could turn the economy around after such a deep financial crisis that had been building for years, in a short amount of time.

What we have today is politicians taking a cue from “reality TV,” trying to be ever more outrageous. And the media is only too happy to oblige. Not only is there no sense of bipartisanship in Congress, but certain Democrats have no compunction trying to take down their own party and President. The planetary influences of Saturn in Virgo opposing Uranus, Jupiter conjoining Neptune in Aquarius, and now Saturn squaring Pluto this year have resulted in politicians and faux grassroots organizations such as FreedomWorks,* who prize destruction over creation. Their purpose is to maintain and profit from a corrupt status quo, using extreme ideological beliefs and tactics to try to create an atmosphere of overblown hysteria.

Monday’s Scorpio New Moon squaring Jupiter and Neptune formed stressful alignments to Geithner’s Sun and Uranus in fiery Leo, attacking his performance as Treasury Secretary out of proportion. Jupiter and Neptune will continue to affect Geithner’s Sun/Uranus through early 2010, raising opposition over ethical (Jupiter) concerns that Geithner since his days as president of the New York Federal Reserve, has been too close to Wall St. Neptune opposing his Sun reflects that Geithner has failed to present a clear and accurate accounting of why AIG’s counterparties were paid in full and how the Bush and Obama Administrations determined which companies lived and which ones died. The influence of Saturn squaring Pluto during the Pluto-ruled Scorpio New Moon is to dig deep below the surface to uncover the secrets that the government and other powerful and influential people are attempting to keep from us in order to advance their own agenda.

Rep. Brady aptly described Saturn conjoining Geithner’s Mars in Libra when he told Geithner at the hearing that “you have to be responsible for your decisions.” But if Geithner is forced to resign, then Rep. Brady, DeFazio and the other members of Congress who agree with them should be demanding that Ben Bernanke resign too. As the head of the Federal Reserve, Bernanke was Geithner’s boss. As a member of the Fed Board of Governors, Bernanke encouraged Fed Chairman Alan Greenspan to keep rates too low for too long, creating the housing bubble. A Republican, Bernanke was also Chairman of President Bush’s Council of Economic Advisors prior to President Bush appointing him Fed Chairman. And now Bernanke’s policy of zero interest rates and excess liquidity has spawned yet another bubble that will burst, creating yet another financial crisis.

If these politicians are truly concerned about the state of our economy, they will ensure the Senate votes against reappointing Ben Bernanke Fed Chairman.

*Steve Forbes is a director and so is Richard J. Stephenson, the head of Cancer Treatment Centers of America. Former U.S. House Majority Leader and corporate lobbyist Dick Armey is Chairman of FreedomWorks.

Vytorin, Mammograms, and the Fight for Unnecessary Medicine

2009-11-17T23:53:00.004-05:00

Published by WallStreetWeather.net
"How is it possible for a drug to have $4 billion in sales without any evidence of benefit?" -Harlan Krumholz, a cardiologist at Yale University on Merck’s Zetia.

Once again a study comparing Merck’s (MRK) cholesterol drug Zetia, this time to Abbott Labs’ (ABT) Niaspan, has demonstrated that Zetia failed to reduce arterial plaque buildup. And like previous studies, more participants experienced a cardiovascular event ranging from heart attack, heart surgery, or death from heart problems from taking Zetia.

Merck disputed the results of the study funded by Abbott Labs presented Sunday night at the American Heart Association conference in Orlando, calling the trial “scientifically inadequate.” Abbott’s Niaspan is a proprietary extended-release version of niacin (vitamin B3) that unlike the vitamin doesn’t cause the severe facial flushing that result when niacin is taken at doses large enough to raise HDL (“good”) cholesterol.

Merck keeps reminding everyone that Zetia and its other cholesterol drug Vytorin (a combination of Zetia and Zocor), lowers LDL (“bad”) cholesterol. Zetia and Vytorin may lower LDL cholesterol, but what is more important: lowering a person’s LDL cholesterol number or improving the clinical outcome of reduced cardiac events? This is like choosing the football player that gains the most yards but suffers the most fumbles. The goal line is to reduce cardiac events, not simply to improve your stats. This certainly gives a whole new meaning to “getting to goal.”

Since all cholesterol drugs carry serious side effects, it is critical that government funded non-industry connected research determine which treatments are most effective at reducing/preventing cardiovascular events for the lowest cost.

You would think that the American Heart Association (AHA) would share this objective, but as this table shows, their loyalties are to the pharmaceutical and medical device industry, especially to the companies who contribute the most money to the AHA. AHA spokesman and former president Robert Eckel said the organization’s stance is that “there is no evidence the drug does harm,” and he “sees no reasoning to be concerned about using Zetia for LDL lowering.” I wonder if the AHA’s opinion has anything to do with the fact that after acquiring Schering-Plough, Merck has overtaken Pfizer (PFE) as the number one pharma contributor to the AHA.

The Sun rules the heart and the Moon rules the breasts. Yesterday’s New Moon in Scorpio squaring Jupiter and Neptune in Aquarius uncovered intense emotional reactions to the revelations of ineffective diagnostics and pharmaceuticals.

Saturn in Libra challenging Pluto in Capricorn reflects that even if Congress fails to pass healthcare reform, medical spending cannot continue on its current trajectory. Saturn restricts, and Saturn in Libra will force the government to decide what treatments provide the biggest benefit at the lowest cost that would fairly benefit the greatest number of people. At first the government will try to negotiate with providers but in the end the government will be forced to take charge and dictate what treatments it will pay for at what cost. Pluto rules insurance, and health insurance companies will negotiate harder with providers and end up following government recommended guidelines even without healthcare reform if they want to survive. Saturn and Capricorn relate to elderly people and Pluto rules reproduction and death. Saturn challenging Pluto means that hard choices have to be made as healthcare in America will be transformed no matter what.

Jupiter represents ideological and religious beliefs and Neptune rules drugs, charities, and brainwashing. Saturn and Pluto represent the powerful corporate interests that fund these consumer friendly sounding charitable organizations. These special interests have done a brilliant job of deluding and manipulating the public into believing that the best healthcare consists of spending the most money on the most tests and treatments.

Nowhere do all the special interests intersect more than the breast cancer industrial complex. This mega industry consists of oncologists, radiologists, imaging equipment makers, surgeons, drugs, etc. along with all these organizations with their pink ribbons that are not only funded by the medical industry, but all the other companies pushing food to cosmetics to apparel and pink toasters. Neptune rules glamour and with a little help from Hollywood, breast cancer has become a big, glamorous business.

Yesterday the U.S. Preventive Services Task Force published guidelines in the Annals of Internal Medicine that it is unnecessary for women to get annual mammograms starting at age 40 (the new recommendation is every other year for age 50-74; no recommendation for 75+). The new guidelines also advise doctors to abstain from teaching women how to perform breast self exams due to lack of evidence. The media (who receives their own largesse from industry participants) are reporting a backlash has erupted over the guidelines. Neptune is about the art of illusion and all the brainwashing that has made many women feel like they’re “victims” even though current mammogram guidelines show no more effectiveness than the new reduced guidelines.

Yesterday’s news about Zetia and mammograms reflects the difficulty in trying to change the business of medicine where practitioners and equipment providers have a vested interest. Overuse of medicine is so inbred in our society that any attempts at usage reduction are meeting with strong consumer objections even when overuse is detrimental to the health of these consumers. Yet people continue to take a costly cholesterol drug that does not prevent heart disease and are willing to subject themselves to so much radiation exposure from getting so many mammograms that they develop breast cancer from it.

Neptune ruling the Scorpio New Moon chart* and Uranus in Pisces conjoining the chart’s Ascendant,** should shock the nation into waking up to how healthcare in America has been hijacked by corporate and “charitable” interests who are doing nothing but bankrupting our bodies and our bank accounts. We need healthcare reform so every American has health insurance. However, that does not mean Americans are entitled to every test and treatment available regardless whether it has been shown to be effective unless a person is willing to pay for such treatments 100% out of pocket.

The Sun is our physical vitality and it rules the sector of the Scorpio New Moon chart representing healthcare. The Sun rules Leo, and Mars in Leo conjoining the health sector shows this is where we need to focus our energy by taking charge of our own health.

Mars rules inflammation which weakens the immune system, potentially setting the stage for a cardiovascular event or cancer cells to multiply and attach themselves to a breast. (The Moon and the sign Cancer the crab rule the breasts. Just like the crab, cancer tenaciously attaches its claws to body tissue, spreading them to expand its home base.***)

Saturn challenging Pluto is about taking responsibility and control over your body and not allowing yourself to be manipulated by the medical industrial complex. The key to maintaining good health is to have a strong immune system. Here are some simple and inexpensive steps that everyone can take to do this:

Eliminate all processed foods and drink. Cancer feeds on sugar (this is why you intake a sugar solution before undergoing a PET scan so the cancerous tissue can be seen).

Cutting out coffee and caffeinated tea will lower your blood pressure.

Drink lots of water.

If you eat meat, buy grass fed beef.

Exercise regularly and incorporate as much walking as possible into your daily schedule; soak up a bit of Sun each day.

Keep to a regular schedule getting up and going to sleep each day.

Set aside time each day for relaxation and/or meditation to reduce stress.

With the Sun, Moon, Mercury and Venus in Scorpio in the sector of the New Moon chart that is Scorpio’s natural domain, we have the power to transform our bodies (Sun) through the power of our mind (Mercury) by eating unprocessed food and drink (Moon). And in the process we’ll become more attractive (Venus) to ourselves and to others.

*November 16, 2009 2:14 PM EST Washington, DC

**The Ascendant is the zodiac sign rising on the eastern horizon at the time of the New Moon.

***This does not imply that people who have the Sun and other planets in Cancer will develop cancer.

No disclosures.

Bernanke’s Dual Mandate: Window Dressing Wall St & Getting Reappointed Fed Chairman

2009-11-17T00:54:00.003-05:00

Published by WallStreetWeather.net
“It is inherently extraordinarily difficult to know whether an asset’s price is in line with its fundamental value. It’s not obvious to me in any case that there’s any large misalignments currently in the U.S. financial system.” – Federal Reserve Chairman Ben Bernanke

The Federal Reserve has a dual mandate, and it’s not price stability and maximum employment. Those are mandates imposed by Congress, and the Fed relishes their independence. But the dual mandate certainly provides a good cover for Bernanke's dual mandate of maximum profits for Wall St. and remaining in power.

Ben Bernanke saw his predecessor Alan Greenspan hailed as a hero while Fed Chairman, only to see the Maestro’s stellar reputation soiled after the credit bubble burst. As the panic slipped into “Depression 2.0,” and as a scholar of the Great Depression, Bernanke knew that he needed to make some bold moves by pulling out all the tools studied back at Princeton’s bubble lab. If the Great Depression lasted longer than it should have because the Fed tightened monetary policy too soon, Bernanke figured that doing the exact opposite would likely pay off and brand him in the history books as an economic hero.

Dropping interest rates down to zero and opening the floodgates of liquidity was Bernanke’s form of window dressing that has allowed Wall St. banks to recapitalize and pass the stress test. A new asset price bubble began rapidly growing in stocks, commodities, bonds, and emerging markets using the dollar as a carry trade. Neptune rules bubbles and inflation. With the Sun squaring Neptune, Bernanke had to assure the audience after giving a speech at the Economic Club of New York today that “supervisory and regulatory methods to restrain undue risk-taking” would ensure “the system is resilient in case an asset price bubble bursts in the future.”

Ever since President Obama announced on August 25 that he was nominating Bernanke to a second term as Chairman, the Fed has stepped up its efforts to emphasize that interest rates would be kept at virtually zero “for an extended period of time” in order to fulfill the dual mandate and persuade investors to continue buying riskier investments in order to obtain higher yield. Just as Bernanke sees no need to raise interest rates sooner in order to support the dollar, he can’t acknowledge that asset prices have formed a bubble. And the Fed Chairman sees no cause for alarm in the falling dollar and therefore no need to support the dollar by raising interest rates now. To admit these things would require the Fed to prepare to contract liquidity which is something he would not want to do at least until after the Senate approves his reappointment as Chairman.

Saturn in Libra is exactly squaring Pluto in Capricorn, affecting the Sun (identity/purpose; the Chairman), Pluto (power/hidden agendas), and Midheaven (sector of reputation) in the Fed’s chart. Even The New York Times today acknowledges “the conflicting goals that Fed officials may have to balance” to bridge the gaping hole between the artificially inflated economy on Wall St. and the harsher economic reality on Main St.

Saturn rules government. Saturn’s square to secretive Pluto coincided with the release of the Special Inspector General for the TARP’s audit that probed beneath the surface to reveal that Bernanke and the NY Fed then headed by Treasury Secretary Timothy Geithner, “refused to use their considerable leverage” to negotiate a reduced payout to AIG’s counterparties, costing US taxpayers billions of dollars. And for all of Bernanke’s talk of transparency, the SIGTARP report critized the Fed’s lame excuses for refusing to reveal the names of AIG’s counterparties.

Saturn and Pluto impacting the Fed’s chart indicate that Bernanke’s dual mandate is going to face tremendous headwinds as these planetary energies demand that structural changes be made that bring monetary policy back into balance by transforming the Fed’s purpose and power. Clearly Ben Bernanke has demonstrated that he is not up to the task as our economy requires a new foundation that will foster long term sustainable growth.

WallStreetWeather.net Forecast For Week Of November 15, 2009

2009-11-15T20:37:00.004-05:00

Summary Of Last Week’s Influences:
The Dow and the S&P reached new highs last week, fueled by the belief that the flow of easy money will support a global recovery.

Markets began last week in full bull mode as the Sun (speculation) challenged Jupiter (optimism; foreign markets) early last week. Traders got the green light to carry on with the dollar carry trade after G20 finance ministers last weekend reiterated their support of continued economic stimulus, with Treasury Secretary Geithner and Prime Minister Brown warning against ending stimulus measures prematurely. Although the IMF issued a report to coincide with the meeting, acknowledging that the Fed’s zero interest rate policy has caused traders to borrow dollars (instead of Yen) to buy assets in other currencies providing higher yield, the IMF report said the dollar is still strong. Adding fuel to the market’s enthusiasm were speeches made by several Federal Reserve bank presidents that continued to emphasize the Fed isn’t likely to budge on raising rates anytime soon.

As mentioned in last week’s Forecast , currency shifts took place last Wednesday as the dollar hit a 15 month low against a basket of the world’s major currencies before regaining some strength. The governments of Thailand, South Korea, Russia, and the Philippines had to purchase dollars to hold down the value of their currencies. As Mercury challenged Neptune, it was unclear what effect if any China’s announcement that it would take major currency trends into account would have on the value of the Yuan that is pegged to the dollar.

Oil made big moves last week, mostly to the downside on concerns that supply far outstrips demand. Gold closed Friday at a new nominal price record high of $1,116.70, edged on by Treasury Secretary Geithner reiterating our “strong dollar policy,” stating Thursday that it is “too early” to talk of asset bubbles.

A front page story in Tuesday’s Wall Street Journal referred to the current bull run since March’s multiyear lows as a “’skeptics’ rally’ – fed by money managers who feel they must make risky bets in order to keep up with the market, but who don’t like what they see.” Interwoven throughout the article is that the immediate to short term future has a “party on” attitude that will have to seriously sober up later.

“You can’t fight the Fed” is certainly the mantra that the market has been reciting. In its role as bank regulator, the Fed’s first concern is the banks. While zero interest rates and excess liquidity are helping the banks to recapitalize and make profits big enough to pay out record bonuses, consumers are not deriving any benefit from it. The government claims it wants Americans to save money, yet savers would be hard pressed to find a savings account or less than a two year term CD that pays enough interest to cover inflation and taxes on interest income. Rates are low yet many consumers who carry a credit card balance are paying between 20-30% interest. The Fed’s effort to change overdraft rules that would require bank customers to “opt in” is a pure political play to keep its power as the rule wouldn’t kick in until July 2010.

The Fed is punishing consumers, pushing them into riskier investments in order to obtain a decent yield. This is particularly hard on seniors living on fixed incomes. This is why the Federal Reserve cannot be in charge of consumer finance and the banking system in general. There is a clear conflict of interest between what is good for consumers and what benefits the bankers. The Fed in its current incarnation has too many conflicting mandates and should only focus on price stability.

We can talk about all the many factors that lead to the financial crisis in the first place, but the bottom line is that all roads lead back to the Fed and Ben Bernanke who served on the Board of Governors under Greenspan’s Fed before he became Chairman in 2006. If monetary and regulatory policy had not been too low and too loose for too long, we wouldn’t be in such a deep and lingering financial mess. But because we apparently didn’t have enough fun the first time around, we had to keep a Fed Board and reappoint a Chairman who continues his negative feedback loop of implementing the same policies over and over again.

In a follow up to my Oct 11 Forecast, NASA confirmed that its LCROSS mission has found lots of water on the Moon. Well, duh! After all, the Moon rules water, our emotional outlook, and women. It was amusing that the news came on Friday the 13th as there are 13 Moons in a calendar year, and Fridays and the number 13 carry a strong feminine energy. Water will pave the way for humans to return to the Moon. And as far as space exploration is concerned, the lawyers are already ahead of NASA!

Summary Of This Week’s Influences:
Saturn makes the first of three challenging squares to Pluto today, the day before the New Moon in Pluto-ruled Scorpio. Saturn challenging Pluto in the waning phase of its cycle tends to dampen the desire to spend, as people are cautious and worried about their income relative to debt.

Right now the market seems to be on autopilot. Stocks and major commodities rise as the dollar falls, and fall as the dollar rises. Saturn challenging Pluto puts downward pressure on the market’s inflated expectations for markets to continue to accelerate, as reflected by the Sun challenging Neptune in Aquarius now. Even the slightest development could cause the asset bubble to burst as investors panic in a mass exodus for the exit door.

Mercury (thoughts/communications) enters Sagittarius this evening until December 5, bringing some needed cheer and humor to offset the heavy duty influences of Saturn and Pluto. Mercury makes a favorable aspect to Saturn tomorrow, helping to uncover the truth about how imbalanced the government’s arrangements with the banks really are. With the Moon (sentiment) in Sagittarius Tuesday and Wednesday, the focus is on emerging markets and trade imbalances, and growth prospects.

Venus in Pluto-ruled Scorpio challenges Mars in Leo later Wednesday/Thursday which could motivate investors to take profits. The Moon shifts into Saturn-ruled Capricorn Thursday and Friday, reinforcing Saturn/Pluto themes and exhibiting caution and concern about financial regulation and debt.

In short, it looks like the indices will be strongest Tuesday and Wednesday, with volatility increasing and sentiment turning negative Thursday and Friday.

Monday, November 16, 2009
A combination of bullish and bearish influences likely keeps the indices choppy and vacillating between negative and positive, but negative sentiment seems more prevalent.

Tuesday, November 17, 2009
Positive.

Wednesday, November 18, 2009
Market improves as day progresses; positive trend bias.

Thursday, November 19, 2009
Negative.

Friday, November 20, 2009
(Options expiration). Negative trend bias, but could stage a late day turnaround.

Saturn square Pluto 2009-2010: Time For Action!

2009-11-15T09:43:00.007-05:00

Published by WallStreetWeather.net
For most of the time from now through next summer, Saturn in Libra is engaged in a challenging square alignment with Pluto in Capricorn. These are not easy energies to work with as circumstances force us on an individual and collective level to strip away the layers of short term quick fixes that expose the hidden rot underneath that can no longer be ignored.

Saturn represents all types of societal structures. Saturn in Libra is about bringing what is out of sync into equilibrium. Pluto in Saturn-ruled Capricorn destroys structural systems that are no longer working efficiently in order to build a solid foundation that supports steady and sustainable long term growth.

Exposing the rot will not be easy as Saturn tends to be cautious and fearful, preferring to maintain tradition and the status quo. And Pluto is highly skilled at manipulating these negative influences in order to maintain power and control over others. However, the forces of change will break through as the pressure of the square between Saturn and Pluto will become too uncomfortable not to take action.

Cardinal signs (Aries, Cancer, Libra, Capricorn) are the initiators, bringing new ideas and new ways of doing things that reverberate on a global level. As Saturn and Pluto prepare to square off for the final time next summer they will be challenged by the bold enthusiasm of Jupiter and Uranus in Aries that has the courage to act on what is feared and resisted. New economic and political policies will be born out of necessity as there is no escape from postponing making the hard choices that politicians would rather pass on.

Libra rules relationships, and the Saturn/Pluto cycle accelerates the ending of relationships that were not completely honest or on an equal footing. Other relationships will become closer and stronger after working through deep seated issues. With Pluto, these issues usually involve things we’d rather keep under cover and are reluctant to discuss with others. Debt, joint financial arrangements, sexuality/reproductive issues, and death/end of life issues are subjects that most people and society (particularly in the U.S.) are uncomfortable having an open and honest discussion about, even with family and close friends.

Saturn contracts; Venus-ruled Libra is money and Pluto is debt. It’s time to pay down/pay off debt. When you live below your means instead of spending too much and being maxed out in debt, you can weather the ups and downs of any economic cycle.

Saturn and Capricorn represent our career and public reputation. Saturn challenging Pluto is forcing millions of people who have lost their jobs to transform their professional identity. Saturn in Libra can worry too much about what other people think, but attempting to keep up appearances leads to desperation. Taking personal responsibility (Saturn) for our actions and not worrying about what other people are doing (Libra), represents the real power (Pluto) and lesson learned (Capricorn) in the journey of life.

Saturn and Capricorn rule history. In order to fully understand where we are now, we have to go back to the beginning of the cycle when Saturn in Libra and conjoined Pluto in 1982. The “special relationship” between the US and the UK was at its zenith then when “political soul mates”* President Reagan and Prime Minister Thatcher were in power.

Saturn conjoining Pluto marked the beginning of a new economic cycle, akin to a New Moon. Pluto rules taxes. With Libra ruling the career/public reputation sector of his chart, Reagan used charm and diplomacy to pass his tax cut overhaul through a Democratic Congress.

Saturn rules government and Pluto nuclear power. By the time Saturn in Leo challenged Pluto in Scorpio in 1993-4, the Soviet empire had collapsed. The economy continued to grow until the bubble popped as we approached the “Full Moon” of Saturn opposite Pluto in 2001-2.

Saturn/Pluto tends to be a conservative political influence, and like the Moon decreasing in light, the waning Saturn/Pluto cycle ushered in a new era of political conservatism in America that placed social conservatism far above fiscal conservatism. President George W. Bush saying “you’re either with us or against us” conveyed far more than the US vs. the war on terrorism. Debt rose as spending was unrestrained.

And now we’re here in the waning square of Saturn and Pluto before a new cycle begins in January 2020. All the issues that weren’t dealt correctly earlier in the cycle such as financial regulation, debt, taxes, healthcare, global power, and nuclear issues, are back and must be addressed between now and early fall 2010. A recent Wall Street Journal “Ahead of the Tape” column succinctly outlines the economic differences between the early 1980s and today.

It is appropriate that the first time Saturn challenges Pluto will be the day before the November 16, 2009 New Moon in Scorpio. This is the “dark time” of the month, and with the Sun, Moon, Mercury, and Venus in Scorpio, there is a lot to process and uncover. Saturn and Pluto affect the Federal Reserve chart’s Sun (the Chairman), Pluto and Midheaven (reputation). Two financial regulatory reform proposals in Congress will alter the Fed’s power (Pluto) in one form or another; both will remove the Fed’s responsibility to control consumer banking (Saturn in Libra). Ben Bernanke’s term as Chairman expires January 31 (see below). He faces a contentious reappointment hearing by the Senate Banking Committee chaired by Christopher Dodd whose proposal would strip the Fed of its regulatory powers.

Saturn/Pluto square President Obama’s natal Venus in Cancer (which conjoins the USA natal Venus in Cancer). The President has acknowledged it is his responsibility to “rebalance” the U.S. economy (Venus) away from being a consumer-driven (Cancer) economy to one of invention and making things again, in line with Pluto in an earth sign (Capricorn). With Pluto in ambitious Capricorn, President Obama views the global economy as his responsibility to rebalance.

Saturn and Pluto’s energies are particularly strong now through February 2010. When Saturn exactly squares Pluto for the second time on January 31st, the unbridled euphoria of Jupiter and Neptune conjoining in Aquarius since the spring of 2009 will have dissolved as we begin 2010. Saturn/Pluto challenging the USA Venus and Jupiter in Cancer combined with the Sun and Venus opposite retrograde Mars in Leo, will be a time to review the actions the government and the Federal Reserve took to rescue the banking system, and how those actions have created another asset bubble in financial speculation on top of the ones that precipitated the financial crisis.

Jupiter and Uranus will challenge Saturn and Pluto during their final alignment on August 21, 2010. This is the “crisis in consciousness” phase** regarding the ideals and ideology of the Saturn/Pluto cycle to date. In the chart for Saturn challenging Pluto in the USA, the challenging alignment of Jupiter, Saturn, Uranus, and Pluto falls in the sectors of the chart representing the financial system, the stock market, and the nation’s debt/interest rates. Venus and Mars in Libra will conjoin the USA’s natal Saturn, while the USA Moon (public) conjoins Neptune in Aquarius and both oppose the Sun in Leo. The only way that Republicans can gain ground during this Saturn/Pluto cycle is if the Democrats fail to deliver on healthcare and the other promises of “change we can believe in” when they control the White House and Congress. However, the GOP claiming to be for deficit reduction but against making any hard choices and spending cuts, is not likely woo enough votes their way.

Like a drug that only masks the symptoms but doesn’t address the origin of the ailment, circumstances will cause the nation to wake up and stop pretending that the consumer based economy will return. Mercury turning retrograde in Virgo in the banking sector of the Saturn/Pluto chart reflects that banking regulations will force banks to return to back to basic banking and raising capital through deposits instead of wholesale funding.

Saturn in Libra challenging Pluto in Capricorn forces us to find new solutions that incorporate only the very best and proven solutions from the past, leaving the rest to history.

*Besides their natal Suns being in harmony, Reagan’s Jupiter exactly conjoining Thatcher’s Saturn in Scorpio reflects they shared the same conservative political philosophy. Reagan’s Libra Midheaven (career and public reputation) exactly conjoined Thatcher’s Libra Sun, enhancing each other’s reputation on the world stage. Both were very close to their spouses who they strongly relied on behind the scenes.

With her Sun in Libra challenging Pluto and Pluto-ruled Scorpio on the Ascendant (outer personality) conjoining Saturn, Lady Thatcher’s strong Libra/Saturn/Pluto energy meshed with the times. (The Ascendant is the zodiac sign rising on the eastern horizon at the time of birth. Individuals born with Scorpio on the Ascendant are ruled by Pluto and Mars. Mars rules iron and Thatcher is nicknamed the “iron lady” for her strong willed personality. Pluto’s energies were accentuated at the time Thatcher was born as from Earth’s vantage point, Pluto appeared to be stationary in the sky preparing to turn retrograde.)

**”The Lunation Cycle” by Dane Rudhyar

USA: July 4, 1776 5:10 PM LMT Philadelphia, PA
Federal Reserve: December 23, 1913 6:02 PM EST Washington, DC
Barack Obama: August 4, 1961 7:24 PM Honolulu, Hawaii
Ronald Reagan: February 6, 1911 3:43 AM CST Tampico, IL
Margaret Thatcher: October 13, 1925 9:00 AM GMT Grantham, England

WallStreetWeather.net Forecast For Week Of November 8, 2009

2009-11-08T20:40:00.003-05:00

Summary Of Last Week’s Influences:
Due to last week’s employment report morphing into a separate post describing the longer term economic outlook, I must forego this section today.

Summary Of This Week’s Influences:
This week is light on economic reports until the end of the week. Wednesday is Veteran’s Day; the stock market will be open but the bond market will be closed. $81 billion in Treasuries will be auctioned this week, with $25 billion in 10 year notes Tuesday and $16 billion in 30 year bonds Thursday. This is the last auction of these maturities this year.

Saturn tends to move slowly and can delay. So it’s not surprising that with Saturn challenging Pluto (debt) now, that the Treasury will replace sales of its 20 year TIP with a 30 year issue beginning in February.

The Sun and Mercury are the most active planetary players, as both continue their transit in Scorpio this week. The Sun challenges Jupiter on Tuesday, which can create inflated and unrealistic expectations. There’s a tendency to be overoptimistic and over commit and overpay. Scorpio and its planetary ruler Pluto expose what has been kept hidden, and Jupiter tends to exaggerate and blow things out of proportion. With Jupiter in Aquarius this year, the “shock value” has been to the extreme.

Wednesdays are ruled by Mercury (communication/movement), and Mercury will harmonize with Uranus which is good for coming up with new ideas and new insights on existing matters. Together with Mercury challenging Neptune, it’s better to pay more intention to your intuition than hard data even though the Moon (emotional barometer) will be in Mercury-ruled Virgo. Avoid signing contractual agreements.

Saturn challenging Pluto is particularly strong right now as this alignment will become exact on November 15, one day before the Scorpio New Moon. I will be writing more about Saturn/Pluto during the week.

The combination of the Sun challenging Jupiter and Mercury challenging Neptune Tuesday/Wednesday could bring currency shifts and big moves in oil. Choppy conditions take the market downward as the week progresses when it becomes less likely the indices will be able to meet/surpass their mid-October 2009 highs.

Monday, November 9, 2009
Indices choppy/mixed to positive; strongest midday/early afternoon. Loses momentum going into the close.

Tuesday, November 10, 2009
Could see large moves in either or both directions. Negative, but improves to positive as day progresses. Weakens to close choppy/mixed with Dow faring best.

Wednesday, November 11, 2009
Choppy and volatile as morning upswing weakens and turns negative.

Thursday, November 12, 2009
Choppy/mixed to mostly positive trend bias.

Friday, November 13, 2009
Strongest early, then choppy/mixed before turning negative.

Main St. Over Wall St. by Q3 2010

2009-11-08T17:21:00.003-05:00

Published by WallStreetWeather.net

Most economic reports last week came in better than expected, along with better than expected quarterly earnings and future guidance from companies such as Ford (F) and Cisco (CSCO). Cisco CEO John Chambers, who spoke about the coming recession in 2007, said he sees a global economic recovery underway. I suppose Warren Buffett agrees since Berkshire Hathaway (BRK.A/B) paid top dollar ($26.3 billion/$100 a share deal) Tuesday to acquire the remaining 77% of Burlington Northern (BNI) Berkshire didn’t already own instead of buying the railroad giant “when other investors are fearful.”

Although there have been companies reporting actual growth during the last quarter, once again most of the companies “beating the Street” did so through additional cost cutting measures. On an annualized basis, Q3 nonfarm productivity was the strongest since 1961. The average work week dropped to a record low of 33 hours in October. Overtime hours increased slightly as companies are handling increases in demand by stretching the workers they have, preferring to hoard cash.

The gains made by Wall St. and some of America’s largest corporations is of little comfort right now to the 15.7 million people who “officially” have lost their job since the recession “officially” began in December 2007. The “official” count of the “unofficial” unemployment rate is now 17.5%. 190,000 jobs were lost in October, propelling the unemployment rate to 10.2%. 1 in 10 Americans out of work is the highest rate of unemployment since April 1983 – the last time Saturn was in Libra.

Saturn represents contraction. Saturn in Libra in the early 1980s conjoined Pluto, which began a new cycle of business prosperity and the bull market. Saturn in Libra is challenging Pluto in Capricorn now through most of 2010. What brought the economy out of recession at the beginning of the Saturn/Pluto cycle in 1982 will not work now as we are in the ending phase of the Saturn/Pluto cycle.*

As I wrote in my Saturn in Libra post, unemployment reached a high of 10.8% in November and December 1982. By April 1983, unemployment had dropped to the level currently reported. Jupiter (expansion) conjoins Uranus (sharp/sudden moves; unexpected events) about every 12 years. Jupiter conjoining Uranus in Jupiter-ruled Sagittarius during most of 1983 reflected that the economy was growing.

On January 17, 2010, Jupiter will enter Pisces, the sign that was traditionally ruled by Jupiter until Neptune’s discovery in 1846. As the last sign of the zodiac, Pisces marks the end one cycle that plants the seeds to sprout in the new cycle. Jupiter will rapidly move through Pisces during the first half of 2010, forming harmonious alignments to the USA Venus (money/banking system), Jupiter, and Mercury (communications/transportation) in Cancer.

Saturn will re-enter Virgo April 7-July 21, 2010. Virgo rules the workforce, and Saturn in Virgo since September 2007 has accelerated the downturn in employment. Saturn will oppose Uranus in Pisces on April 26, marking the fourth time that the energies of Saturn (maintaining the status quo) vs. Uranus (reform/future direction) have been engaging in a two steps forward/one step backward dance since Election Day 2008.**

Saturn opposing Uranus together with Saturn challenging transformative Pluto (November 15, 2009, January 31 and August 21, 2010), indicate taking responsibility for the current situation by learning the lessons of the past several years as the USA experiences its Saturn return during 2010-11.*** All of these planetary energies require taking action that in the long term will create a sustainable economy instead of a band aid quick fix that serves political agendas yet only prolongs the pain.

Jupiter will conjoin Uranus June 8 and September 18, 2010, and January 4, 2011. The first alignment will occur when Jupiter and Uranus make a brief debut at the beginning of Aries, and the last two will occur at the end of Pisces. As the first sign of the zodiac, Aries is enthusiastic about taking action to start new endeavors which will help to heat up the economy, particularly in infrastructure, the electrical grid, aerospace, and completely new inventions. This will also include new forms of energy. Expect the U.S. to begin an industrial leap forward that will leave the emerging markets and Japan to copy us.

In late July 2010, Mars, Jupiter, Saturn, Uranus, and Pluto will be at the beginning of cardinal (action-oriented) signs. Although Saturn and Pluto are in a waning cycle, these planets at the beginning of cardinal signs will initiate a new direction for our economy and society. While these planetary alignments will be challenging, they also represent the courage and motivation to pioneer ahead. Employment should begin to show signs of growth by the second half of 2010.

Jupiter was last in Pisces when hedge fund Long Term Capital Management imploded. With Jupiter conjoining Uranus in Pisces in 2010, hedge funds could be the next act of the financial crisis if left unchecked. Pisces rules asset bubbles, and Jupiter in Pisces conjoining Uranus can indicate the sharp collapse of asset price bubbles. These energies also indicate that inflation is likely to spike sooner and sharper than the Federal Reserve is prepared for.

Between the bubble bursting and looming financial regulation, the irony here is that as Main St. begins to show signs of recovery, Wall St.’s profits will be waning.

*Saturn will conjoin Pluto on January 12, 2020.

**Saturn opposite Uranus: November 4, 2008, February 5 and September 15, 2009, April 26 and July 26, 2010. It’s important to keep in mind that these are long term planetary influences that are in effect before and after all the exact dates listed in this post.

***A Saturn return occurs about every 28.5 years when transiting Saturn conjoins natal Saturn. For countries as well as individuals (age 28/29, 58/59, etc.), it marks a time of testing and learning life’s lessons. Dedication, doing good work, and not living beyond one’s means tends to reap benefits at the next Saturn return.

No disclosures.

Federal Reserve Preparing For Higher Long Term Rates

2009-11-05T22:24:00.005-05:00

Published by WallStreetWeather.net
When a planet gives the appearance of being stationary in the sky from Earth’s vantage point its energies are more pronounced. Neptune represents illusion, idealism, euphoria, panic, creativity, and the world of dreams. Neptune rules interest rates, inflation, bubbles, credit, oil, and fraud.

Neptune is stationary October 29 to November 10 as it changes direction from being retrograde since May 29. While Neptune themes are more likely to dominate the news during this time, Neptune's energies are particularly prominent when it turned direct November 4. From now until May 31, 2010, Neptune’s energies will be more outwardly focused.

Neptune rules fog and cloudy conditions that obscure our ability to see clearly. In the Weekly Forecast, I predicted that there would be two changes in the FOMC statement; the Fed telegraphed it was not prepared to do either one at this time.

Although the FOMC statement was basically a reiteration of the Committee’s September 23 statement, it did contain two tiny tweaks. The Fed extended the second sentence in the third paragraph that further reinforces their justification for keeping rates at record lows. Yet the Financial Times and The Wall Street Journal viewed the addition of“including low rates of resource utilization, subdued inflation trends, and stable inflation expectations” to mean that if these conditions don’t follow the Fed’s belief of “subdued inflation for quite some time,” then the Fed will have to raise rates. (Of course it’s easy for the Fed to say inflation is “subdued” when it ignores non-discretionary spending on utilities, insurance and all types of taxes in its calculations.)

The second tweak made to the statement is that the Fed will purchase “about $175 billion of agency debt” (from Fannie Mae & Freddie Mac), $25 billion less than the Fed had previously announced. The Fed said this was due to “the limited availability of agency debt.” Saturn challenging Pluto now through February reflects the Fed contracting (Saturn) their debt (Pluto) purchases the Fed previously announced it will complete through the first quarter of 2010.

In essence the Fed has signaled it intends to keep short term rates at rock bottom while allowing long term interest rates to start to drift upward. This will push bank deposit rates as close to zero as possible while increasing lending rates, allowing banks to make a bigger profit on the spread. The Fed is reiterating that now is the time to lock in a fixed rate 30 year mortgage.

Another reason why the Fed isn’t ready to announce it is preparing to tighten comes down to politics. Fed Chairman Bernanke has yet to be reconfirmed to a second term by the Senate and it is shaping up to become a cantankerous hearing. To paraphrase former Fed Chairman Alan Greenspan, politicians never ask the Fed to raise rates. Venus in Libra exactly conjoining Bernanke’s natal Mars and Neptune yesterday reflects his willingness to act as politically accommodating as possible right now.

The challenging alignment of Saturn in Libra and Pluto in Capricorn are impacting the Fed’s natal Sun (its identity) opposite Pluto (its power) now. The Fed is under pressure to prove to Congress that it is still the best qualified and the most capable of balancing its many roles as the nation’s central bank. Saturn represents limitations and Pluto the loss of power if Congress creates the Consumer Financial Protection Agency that would remove the Fed’s ability to control consumer finance.

Pluto began affecting the Fed during 2008, exposing the Fed’s flaws that helped enable the financial crisis. The Fed’s conduct during the financial crisis and opaque arrangements has resulted in a push for transparency. From a Bloomberg news Freedom of Information Act lawsuit to a bipartisan movement in the House to pass legislation for the GAO to audit the Fed for the first time ever, the pressure is mounting to rein in the Fed’s discretion. Rep. Alan Grayson (D-FL) and Rep. Ron Paul (R-TX) wrote a letter to Senate Banking Committee Chairman Christopher Dodd requesting the Committee delay Bernanke’s confirmation hearing until the Fed releases more documentation about its financial rescues.

Today’s Wall Street Journal reports Sen. Dodd is about to unveil a bill where the Fed would not only lose their ability to regulate consumer finance, but would also be stripped of almost all bank supervision powers, replaced by a new single national bank regulator. As the WSJ observes, “under the proposal the Fed likely would emerge as a completely different agency...” Pluto represents nothing less than total transformation, and Capricorn represents government, established structures and hierarchies. What is no longer living up to its original purpose and intent must be destroyed in order to be transformed. The influence of Saturn and Pluto emphasize downsizing the Fed back to its primary focus on monetary policy – which is exactly what Sen. Dodd’s bill intends to do. The Fed’s counterargument is that without a regulatory function, the Fed cannot monitor and keep abreast of the banking system in a timely manner. The Fed’s function is to protect the banking system; therefore a regulatory role for the Fed is clearly a conflict of interest.

One job the Fed has telegraphed it does not want because it believes they can’t be identified is the responsibility for preventing asset bubbles. The Fed refuses to acknowledge its overly accommodative policies are building bubbles that if left unchecked could grow to rival the size of Jupiter before they burst.

Reading a front page story in yesterday’s Wall Street Journal (“Fears of a New Bubble as Cash Pours In”) feels like a dream where it’s 2005 again. Gold traded at $1,094 an ounce intraday yesterday, oil is hovering around $80 despite plentiful global supplies, and sugar and other commodities are at or near new highs due to money seeking higher yielding investments. Real estate in southeast Asia is booming, and global investors have poured an estimated $53 billion into emerging stock funds this year. Jupiter (foreign investment) conjoining Neptune for most of the year has rapidly expanded asset inflation. The IMF and the World Bank are worried about asset bubbles, but the Fed is not.

The overall consensus believes the Fed will not raise interest rates until at least six months from now. In addition to Saturn and Pluto, Jupiter will conjoin Uranus in the late Spring, also forming a challenging alignment to the Fed’s Sun and Pluto. If the Fed waits until their June 23, 2010 meeting to raise rates, the increase will have to be more than a quarter percent to tame the spike in inflation that is likely to occur then.

GMAC has no Ally in the FDIC

2009-11-03T22:52:00.001-05:00

Published by WallStreetWeather.net
A Full Moon occurs when the Sun and Moon are in opposition to one another, and the November 2 Full Moon in Taurus shines the spotlight on banking and lending practices. A front page story in The Wall Street Journal highlights the conflict between GMAC’s Ally Bank and the FDIC.

The Federal Reserve granted GMAC emergency approval on Christmas Eve to become a bank holding company in order to receive $5 billion from the TARP. The Fed became the primary regulator of GMAC while the FDIC supervised Ally Bank, GMAC’s new state-chartered commercial bank. On May 21, 2009 the Treasury injected an additional $7.5 billion capital and guaranteed up to $7.4 billion of GMAC debt while the FDIC agreed to guarantee up to $7.4 billion in bank debt, increasing the government’s stake in GMAC to 35.4%.

While GMAC did not pose a systemic risk to the financial system, the government’s bailout was designed so GMAC could provide financing to consumers and auto dealers to stem further economic risk to Main St. In essence this was an industrial rather than a financial policy.

Despite their ads and commercials touting how straightforward and upfront they are compared to other banks, the advertising doesn’t mention that Ally Bank is part of GMAC unless you visit Ally’s website. These ads along with Ally paying higher savings rates got the other banks complaining to the regulators that Ally wouldn’t be in business if it wasn’t for the government’s help. (Never mind that many of the banks complaining wouldn’t be in business either.)

As an internet bank, Ally has to offer savings rates that are higher than brick and mortar banks in order to attract deposits. Even though deposits are insured to FDIC limits, the fact that GMAC was previously associated with General Motors also requires an extra incentive to get people to do business with them.

The FDIC wrote to Ally in June, telling the bank to lower its savings rates and reduce its reliance on deposits as a source of capital. Additionally, the FDIC told GMAC that it didn’t want to see Ally on Bankrate.com’s list of the top 5 rate payers. Ally’s rate on a one year CD dropped from 2.8% in late May, to 2% by September. (The national average rate during that period dropped from 1.23% to 0.95 %.) As Ally lowered savings rates, the bank saw new deposits drop from more than $1 billion a month in the second quarter to $200 to $300 million a month in the third quarter.

It’s questionable why the FDIC is pushing GMAC from using Ally deposits to fund auto loans and dealership inventories toward greater dependence on wholesale funding. Given the difficulties that investment banks Bear Stearns and Lehman Brothers faced by being almost entirely dependent on wholesale funding, GMAC does not have a promising future by following suit. Just as GMAC became a bank holding company its ability to act like a traditional bank is being severely restrained.

The FDIC’s zest to protect its exposure to Ally Bank deposits is creating greater risk for GMAC as a whole. What we have here is a classic conflict between industrial policy and the need for safety from financial risk. The government must decide whether GMAC’s role as a conduit to consumer finance is important enough for the FDIC to incur greater risk, or be willing to let GMAC go the route of other companies that based their business on wholesale funding.

Taurus is ruled by Venus which is the principle of attraction. Banks have to attract customers to make deposits so they can use those deposits to lend money out. Debt is ruled by Scorpio and Pluto, which is a more expensive method of raising capital. Scorpio and Pluto rule bankruptcy. It’s no secret where CIT ended up when they were not allowed to take deposits and act as a traditional bank.

WallStreetWeather.net Forecast For Week Of November 1, 2009: “Bankers Full Moon Apocalypse Edition”

2009-11-01T20:53:00.002-05:00

Summary Of Last Week’s Influences:
The closure of the San Francisco-Oakland Bay bridge Tuesday after a crossbar and two steel tie rods installed over Labor Day weekend snapped and fell into westbound lanes during rush hour, should serve as a warning that there are no quick fixes to old and decaying infrastructure. Just as the government conveniently neglects to factor in the real world cost of living in its inflation calculations, the Labor Day repair crew conveniently overlooked how real world factors such as weather and traffic on the bridge would affect the repair.

Bridges provide a connection. Libra rules bridges as this sign seeks to bring together two people or entities. As Saturn entered Libra last week, financial markets woke up to the reality that the bridge of economic recovery is not strong enough to support enough traffic to push equities to a higher level. Gluskin Sheff Chief Economist & Strategist David Rosenberg pointed out on October 29 that markets hadn't sold off on higher volume since the multiyear lows of late February/early March. Rosenberg elaborates that of the 95 up days since the March low, 62% of those up days occurred on light volume.

Returning to my analogy, the quick fix to the bridge supported light traffic coming from hedge funds, flash trader buying, and short covering that exaggerated the market’s moves which created the illusion that the government sponsored rally was built on a more solid and sturdy economic structure.

In last week’s Forecast I wrote that “financial markets will begin to make larger and more volatile moves this week.” The Dow made triple digit moves every day but Tuesday. Just in time for Halloween, the Volatility Index’s (VIX) “fear factor” rose almost 25% Friday, closing above 30 for the first time since July.

During Halloween time, it is believed that the veil separating the living and the dead dissolves. Neptune represents beliefs and illusions. Neptune creates conditions that obscure visibility, creating the illusion that certain boundaries or barriers no longer exist. Neptune rules addictions, and Wall St. is addicted to the Fed’s zero interest rates, excess liquidity and government stimulus that have fueled the rally.

Neptune’s energies are pronounced October 29 through November 10 as the planet appears from Earth’s vantage point to be stationary in the sky as it changes direction from being retrograde since May 29 to direct motion November 4. Neptune rules Pisces, symbolized by two fish swimming in opposite directions. Neptune’s energies were even more pronounced last Thursday and Friday when the Moon was in Pisces. The Moon represents market sentiment, consumers, and real estate. Sentiment was bullish Thursday after third quarter GDP came in better than expected, but turned bearish Friday when consumer spending and sentiment failed to meet market expectations. Suddenly 3Q GDP wasn’t as strong as it appeared to be as most of the gain came from the expired “cash for clunkers” and the first time homebuyer program that is set to expire November 30 if Congress fails to pass an extension.

Halloween marks the time of the year when the Sun is in Pluto-ruled Scorpio. Pluto rules death. This is the time of the year when nature appears to decay and die. This too is an illusion as nothing really dies; it is just in the process of being transformed to be reborn into new life in the Spring.

And now that Saturn is in Libra forming a challenging alignment to Pluto in Capricorn, Wall St. is facing the cold and harsh reality that an imbalanced rally that is decoupled from the rest of the economy has no foundation to move higher until much needed major structural and time consuming repairs have been implemented to balance and bridge the wide gap between Wall St. and Main St.

Pluto is known as the wealthy and powerful lord of the underworld. As the days become shorter and darkness descends, it is time to investigate and uncover the secrets of Pluto’s domain. The trick is not to be afraid of what might be uncovered, but to deal with it now before it becomes even more difficult and painful.

When Pluto in Capricorn first opposed the USA Venus (banking) on March 9, the market began its rapid ascent from the market’s perceived financial armageddon of the S&P at 666. The plutocrats running the government (Capricorn) created an environment to spark a rally with the intent that the gains would help banks to quickly recapitalize. The conjunction of expansive and optimistic Jupiter with Neptune in Aquarius this year helped propel the market from one extreme to the other.

As Saturn shifted into Libra last week, the market once again became fearful about financial issues that never disappeared but were merely obscured by Neptune’s veil of illusion. Commercial real estate woes are back in the spotlight, and concerns about whether banks have enough capital were increased when Calyon Securities analyst Mike Mayo said he expects Citigroup (C) will have to write down $10 billion in deferred tax (Pluto) assets in Q4 for fear Citi’s losses are so big that time (Saturn) will run out before Citi will be able to take advantage.

Just as retail investors began putting more money into mutual funds than they took out in the prior week, institutional investors appear to be heading toward the exit.

Summary Of This Week’s Influences:
Monday’s Full Moon in Venus-ruled Taurus (2:14 PM EST) illuminates the banking system and the amount of loan losses on and off bank’s balance sheets. Mars in speculative Leo challenging the Taurus Moon and the Sun and Mercury conjoined in Scorpio indicates that the market will swiftly react to the latest information uncovered about the banks. These energies are especially strong in the USA as the Taurus Full Moon chart is in its “home” sector of the chart representing the financial system.

The Sun in Scorpio is at home in the chart sector representing shared resources, debt, taxes, and bankruptcy. Commercial lender CIT filed for Chapter 11 bankruptcy this afternoon, with Carl Icahn providing debtor in possession financing. Icahn's loan moves ahead of the $2.33 billion CIT received from the government after the Federal Reserve gave emergency approval for CIT to become a bank holding company in order to qualify for TARP. In its December 22, 2008 emergency approval, the Fed described CIT as “well capitalized under applicable federal guidelines.”

This Full Moon has the potential to begin financial apocalypse, as the pronounced energies of Neptune rule the Full Moon chart in the USA,* lifting the veil to reveal the financial system is not as solid as it appears.

McClatchy owned newspapers reported today that for five months during 2006-7 Goldman Sachs (GS) was selling $40+ billion of “triple-A” rated MBS to pension funds and institutional investors at the same time it was secretly betting against these securities by purchasing CDS to hedge against a housing downturn.

Neptune rules fraud. The combination of Saturn, Neptune, and Pluto with Mars in Leo has stepped up taking action to clamp down on insider trading on Wall St. We’re quickly finding out that year after year of gains only means some have an edge on acquiring and acting on insider information rather than being the smartest guys in the room.

Neptune rules oil. Neptune stationary periods tend to correlate to large moves in crude oil, and oil has tended to drop on demand concerns during Neptune's station. Inflation, asset bubbles and credit issues tend to be a concern in one form or another when Neptune’s energy is pronounced.

Neptune has been going back and forth over the NYSE’s natal Pluto in Aquarius since March 2008 when the government arranged for Bear Stearns to be dissolved into JPMorgan Chase (JPM). During Neptune’s second pass, crude oil hit a record high in July 2008 and banking analyst Richard Bove asked, “Who Is Next?” Neptune rules communism, and by the third pass to the NYSE Pluto in early 2009, even the most ardent free marketers were sounding like communists by calling for bank nationalization.

Neptune will turn direct conjoining the NYSE Pluto for the final time on Wednesday. One hour and five minutes later, the FOMC Announcement will be released. I think there will be two changes in the statement and at least one of these will catch the market off guard at this juncture. The Fed will describe how it has been working behind the scenes so it is ready to act to remove excess liquidity from the system. The second change will rework the sentence about economic conditions warranting low rates; the “extended period” will likely be removed.

The combination of all the planetary influences I have described will continue to create large market moves and volatile conditions. Although the overall trend this week is negative, it could still be interspersed with brief upward moves as the market would prefer to operate in denial under a veil of illusion even though the strong influence of Saturn and Pluto is bringing out Neptune’s other tendency for panic that spreads like a contagion.

Monday, November 2, 2009
Negative.

Tuesday, November 3, 2009
Positive then becomes choppy/mixed to negative by early afternoon.

Wednesday, November 4, 2009
Negative.

Thursday, November 5, 2009
Negative trend bias.

Friday, November 6, 2009
Improving conditions as the day progresses.

*as well as the November 16 Scorpio New Moon chart.

No disclosures.

Saturn and Pluto Uncloak the Fed’s Secret Financial Arrangements

2009-10-28T21:11:00.008-04:00

Published by WallStreetWeather.net

Remember Ben Bernanke’s fake anger over the government’s bailout of AIG and the government-induced hysteria that erupted in mid-March over bonus payouts at AIG that were approved by the Fed and Treasury?

In “New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers,” Bloomberg reports that prior to the government taking 79.9% control of the company, the CFO of AIG’s Financial Products Division was in the process of negotiating with the banks who bought credit default swaps on CDOs from AIG to agree to accept payouts of around 40 cents on the dollar.

But once the government took majority control of AIG, Timothy Geithner who was then president of the New York Fed, along with Bernanke and then Treasury Secretary Hank Paulson, took over the negotiations. According to Bloomberg, people who saw a draft of the term sheet said that part of a sentence containing a blank space intended to show the amount of the haircut the banks would have taken was crossed out.

By making an almost bankrupt company pay counterparties at par (100%), the Federal Reserve has cost taxpayers at least $13 billion. This was unnecessary since a precedent had already been established by bond insurers such as Ambac (ABK) who got banks to agree to take a haircut on CDS commutations. Beyond the fact that the government paid far more than necessary, these banks probably had hedges against the insured CDOs or had already taken writedowns on their value.

Goldman Sachs (GS) received $13 billion - the largest beneficiary of the government’s payout. The moment the government took control of AIG on September 16, 2008 Paulson replaced AIG’s recently hired chief executive with Edward Liddy,* a Goldman Sachs director. After the Fed rescued Goldman from potential collapse by allowing it to become a bank, Stephen Friedman, then Chairman of the Board of Directors of the New York Fed and a Goldman director, received a special waiver January 21 from Fed Vice Chairman Donald Kohn that had been requested by Timothy Geithner so Friedman wouldn’t have to sell his Goldman shares or resign from Goldman’s board to comply with Fed policy prohibiting a “class C” director from serving on a bank board and owning bank shares.

As I noted in a post about Timothy Geithner, Friedman was selected by the Fed Board of Governors to represent the public on the New York Fed’s Board. The former Chairman of Goldman Sachs bought 52,600 Goldman shares – after the Fed forced AIG to pay Goldman and the other banks at par and before receiving the special waiver from the Fed on his original holdings of Goldman stock.

Pluto rules secrecy. With transiting Pluto conjoining Friedman’s Sagittarius Sun then, he must have believed his stock purchases would remain secret. Sagittarius and its ruler Jupiter represent ethical issues. With his natal Jupiter in Aquarius opposing Pluto in Cancer, Friedman would have the tendency to view his situation as unique and that his conduct might be stretching the law but not technically in violation of it. Reports about Friedman’s stock purchases in The Wall Street Journal caused Friedman to resign from the New York Fed on May 7.

Despite Bernanke’s public claims to increase Federal Reserve transparency, behind the scenes Fed officials were urging AIG executives to keep the transactions secret. One top AIG executive told Bloomberg he was pressured by the New York Fed not to file SEC documents divulging details of the payments to the banks. It was only a few days before the hearing about AIG bonuses that AIG publicly revealed who the counterparties were and the amounts they received.

In “Federal Reserve Protects Its Turf For Fear Of Getting Eclipsed,” I wrote that the Fed had hired its first lobbyist, Linda Robertson, who ran Enron’s DC lobbying office. While some media outlets were fixated on Democratic Rep. Alan Grayson’s** remark about her, it obscures the real issue which is why does the Fed have its own lobbyist in the first place?!

Capricorn and its planetary ruler Saturn represent government. Pluto entering Capricorn in 2008 brought the greatest level of government intervention in the financial system since the 1930s when Pluto was in Cancer, Capricorn’s opposite sign. Saturn entering Libra and challenging Pluto now represents a time to create fairness and transparency in the relationship between the government and the financial system.

Saturn challenging Pluto will be influential for the next several months, especially now through February 2010 as many of the actions taken by the government since the financial crisis erupted last year are found to be inadequate and nothing more than a band-aid. You cannot protect the status quo with Saturn challenging Pluto as this is definitely not a “business as usual” type of energy. Saturn/Pluto requires major structural changes to transform a financial system that is out of balance. This represents the death of outmoded structures that must occur in order to lay the foundation for implementing new reforms that will begin in the May 2010 when Uranus moves into Aries and opposes Saturn and challenges Pluto.

As I have written for quite some time on this blog, no government entity will be affected by these intense energies more than the Federal Reserve.

*Edward Liddy resigned from AIG on May 21, 2009. He was replaced by Robert Benmosche, the retired CEO and Chairman of Met Life (MET).

**For something more mature, here’s a You Tube video of Rep. Grayson questioning Scott Alvarez, the Fed’s general counsel, at a September 25, 2009 House Financial Services Committee hearing on legislation to audit the Fed.

Stephen Friedman: December 21, 1937 time unknown Brooklyn, NY

No disclosures.

WallStreetWeather.net Forecast For Week Of October 25, 2009

2009-10-25T22:04:00.004-04:00

Summary Of Last Week’s Influences:
Is it 1999 or 2009? On Friday shares of Amazon.com (AMZN) jumped $25.04 to a record closing high of $118.49, surpassing its 1999 high during the dot.com craze. Shares of Apple (AAPL) also hit a new high last week.

This is the stock market’s way of rewarding the few companies that beat earnings expectations through strong quarterly profits and growth projections. Beyond that, the stocks reflect the 36.6% rise of the NASDAQ this year attributed to Jupiter (expansion; optimism) in Aquarius (tech) forming mostly favorable aspects to the NASDAQ chart. Amazon went public went in 1997, the last time Jupiter was in Aquarius, and is experiencing its first Jupiter return now.

Jupiter combining with Neptune for most of the year reflects the decoupling of financial markets from the rest of the economy. Neptune rules oil which closed above $80 a barrel this week despite the fact that demand is weak and supplies are plentiful. Chalk it up to asset inflation supported by ultra loose monetary policy.

While most of the media was focused on the pay czar’s compensation rulings, along with Federal Reserve Chairman Bernanke’s announcement that the Fed will “examine” pay practices at the “28 largest and most complex banks,” there are larger issues that need to be addressed that would in turn take care of the plutocrats’ payouts.

Obama Administration pay czar Kenneth Feinberg won’t need to move to Pluto since he’s kept something far more important to these companies in place: the channels connecting the plutocrats on Wall Street with the plutocrats on K Street and the plutocrats in Congress who are eager to receive their largesse in private while publicly chastising their behavior in front of Main Street.

With the newfound euphoria on Wall Street, banks have returned to heavy lobbying and political donations. The Wall Street Journal reports Bank of America (BAC) donated $30,500 to Republicans and $13,500 to Democrats in September. The Federal Reserve saved Goldman Sachs (GS) and Morgan Stanley (MS) from last fall’s carnage on Wall St. by allowing them to become “banks.” Morgan Stanley’s PAC doled out $110,000 in political donations in October, and Goldman’s PAC gave $37,500 mostly to Democrats, in September. Currently the only companies prohibited from lobbying the government are Fannie Mae (FNM) and Freddie Mac (FRE).

Even if Feinberg prohibited the seven companies from lobbying and donating to members of Congress, why should the restriction end there? Goldman, JPMorgan Chase (JPM) and other companies that have paid back the TARP are still receiving the biggest benefit of all as they have been deemed too big to fail by the government. That brings these companies more business in an environment with fewer competitors and more favorable borrowing terms. If the Administration is going to set pay rules on the seven companies that have received "exceptional assistance," other companies continuing to benefit from government assistance should be forced to abide by them as well. And that should extend to the health insurance companies who are allowed to reject applicants and rescind policies while at the same time collecting government subsidies for Medicare Advantage.

Part of the Obama Administration’s financial regulatory reform overhaul would make the Federal Reserve the Chief Systemic Risk regulator over financial institutions deemed systemically important to the financial system. In what might be considered writing your own job description, on Tuesday the Fed appointed Patrick Parkinson to head bank supervision and regulation at the Fed after he did a brief stint at the Treasury working on the very plan that would give this new power to the Fed/himself! (There is a chance that the Fed will not be given these powers as it must be approved by Congress.)

On Thursday the House Financial Services Committee voted 39-29 to create the Consumer Financial Protection Agency. Two Democrats – Walt Minnick of Idaho and Travis Childers of Mississippi had the nerve to vote against it; Mike Castle of Delaware was the lone Republican voting for it. Banks and other lenders are heavily lobbying to stop this, trying to convince consumers that their “freedom” to make financial choices will be taken away if the new agency is created. Oh yes, let’s choose to have credit cards with a 30% interest rate, adjustable rate mortgages, and “pick-a-pay” negative amortization mortgages so we can have more people drowning in debt! Already the House Financial Services Committee bowed to lobbyists by voting to exempt automobile dealers; hopefully this will be changed in the final bill.

Even though September existing home sales were better than expected Friday, the Sun moving into Scorpio (taxes) reflected that the market attributed the increase to the $8,000 homebuyer tax credit which is set to expire November 30 unless Congress votes to extend it.

How hypocritical that the most ardent supporters of extending and expanding the credit to $15,000 for all homebuyers earning up to $300,000 year for married couples, are the “free marketers” who are most vehemently against healthcare reform over concerns about increasing the deficit! According to congressional estimates, extending the cost of the current homebuyer tax credit would cost about $1 billion a month. On Wednesday the House and Senate judiciary voted to overturn a 1945 law exempting health insurance companies from federal antitrust violations that every other industry in America has to abide by.

The IRS and the Justice Department are investigating more than 100 suspicious schemes involving the current homebuyer tax credit. The Treasury Department states at least 19,000 filers who didn’t even buy a home claimed $139 million in tax credits that were reimbursed by the government. And over 500 people under 18, including a 4 year old child have claimed the credit by parents who did not qualify!

Summary Of This Week’s Influences:
A major societal shift is underway as Saturn enters Libra early Thursday afternoon, providing a six month preview of the structural changes underway that will transform the financial system.

To give you a sense of what this means, Pluto entered Capricorn on January 25, 2008 and provided a six month preview of what was to come once Pluto returned to Capricorn November 26, 2008 until 2024. From a $7+ billion loss from a “rogue trader,” the UK government takeover of Northern Rock, to the collapse of Bear Stearns, financial markets were unraveling from the excess risks taken during the years of Pluto in the global sign of Sagittarius (1995-2008). These years marked the apex of financial “innovation” that was outsourced around the world. Pluto rules debt, and suddenly all that debt went from something you could make money on to a mountain of toxic trash when Pluto entered Capricorn.

Sagittarius is ruled by Jupiter which explains not only why everything physically expanded (SUVs, McMansions, people), along with the overly optimistic, instant gratification attitude of borrow and spend now and we’ll deal with any consequences at some future date.

Jupiter and Sagittarius describe our philosophical and religious outlook. When the Bush Administration’s religion of moral hazard got freaked out after Lehman Brothers collapsed, Hank Paulson, Timothy Geithner, and Mr. Sagittarius Ben Bernanke, got inspired from across the pond and in true this is the last roundup of Pluto in Sagittarius fashion decided to make the banks that they were afraid were too big to fail even bigger!

Now after JPMorgan Chase has swallowed Bear Stearns and Washington Mutual and Bank of America took on Countrywide Financial and Merrill Lynch, it would be an extremely difficult process to break them apart into pieces. This is what Mervyn King, the governor of the Bank of England would like to do with UK banks if the Financial Services Authority approved it. Last week former Federal Reserve Chairman Paul Volcker, Chairman of the President’s Economic Recovery Advisory Board, advocated the separation of commercial and investment banking that existed prior to the 1999 repeal of the Glass-Steagall Act.

Saturn in Libra is forming a challenging alignment to Pluto (exact November 15). Saturn and Capricorn rule government, which has pulled out all the stops for these banks to profit through investment banking. But the challenging alignment of Saturn and Pluto means the limo rides don’t come free unless you get permission from the pay czar. The banks are super big, but they will be also be super regulated to the point where they eventually are run like utilities.

Virgo is the bookkeeper, and Saturn will re-enter Virgo just in time for banks to report first quarter 2010 earnings when FASB requires that banks bring back certain off balance sheet securitizations back onto their books.

It’s not just banks that will be feeling the pressure. As soon as Saturn enters Libra it will challenge the Federal Reserve’s natal Pluto in Cancer. Cancer is ruled by the Moon (consumers). The government will create the Consumer Financial Protection Agency that will remove the Fed’s power to control consumer finance.

Saturn challenging Pluto also represents the gradual contraction of the Fed’s liquidity and lending programs. Friday is the deadline for the Fed to complete its $300 billion purchase of Treasury securities, during a week that will see a record $123 billion of U.S. debt issuance.

Mercury enters Scorpio Wednesday morning until November 15. The combination of Mercury entering Scorpio, Saturn entering Libra, and Saturn challenging the Fed’s Pluto, could at least bring a quick shift in currency and bond price fluctuations. Scorpio is ruled by Pluto. With Mercury making a favorable aspect to Pluto Wednesday, this is a good day for doing research, especially with the Moon in Pisces. Scorpio/Pluto rules secrets, debt, taxes, insurance, and nuclear issues – all themes that will be prominently featured in the news during the next few weeks.

The indices reached new 2009 intraday highs last Wednesday around the time Mercury in Libra harmonized with Jupiter in Aquarius. Venus in Libra will harmonize with Jupiter midweek, attempting to make another new high to tone down the much more cautious influence of Saturn entering Libra and challenging Pluto.

The pleasant vibes of Venus and Jupiter quickly give way to the Sun in Scorpio challenging Mars in Leo late Wednesday/Thursday which could spark a selloff. There could be more news about insider trading and/or new revelations about hedge or pension fund fraud.

Financial markets will begin to make larger and more volatile moves this week.

Monday, October 26, 2009
Positive trend bias; likely strongest early in session.

Tuesday, October 27, 2009
Negative, but could improve in mid-afternoon.

Wednesday, October 28, 2009
Big moves in either or both directions; positive bias.

Thursday, October 29, 2009
Early enthusiasm wanes and sparks a sell off.

Friday, October 30, 2009
Big moves in either or both directions; negative bias.

No disclosures.

Saturn in Libra: Time to Balance the Scales (October 29, 2009 – October 5, 2012*)

2009-10-24T22:55:00.008-04:00

Published by WallStreetWeather.net

“Do what thou wilt shall be the whole of the Law. Love is the law, love under will. There is no law beyond Do what thou wilt.” - Aleister Crowley, The Book of the Law

Saturn represents time, structures, boundaries, and foundations. On October 29, 2009 Saturn enters Libra. Libra is symbolized by the scales representing balance, fairness and equal justice under the law. The cycle of Saturn in Libra is about bringing what is out of balance into equilibrium by taking responsibility for the choices we make.

Saturn operates well in Libra as Saturn’s principle of karma (action) combines with Libra’s need for balance and justice. Saturn’s law of karma is commonly understood by the expression, “as you sow so shall you reap.” Libra is ruled by Venus (money/banking). Positive actions are like a bank deposit or credit to our account, and negative actions act like a bank withdrawal or debit.

During Saturn in Libra we learn valuable life lessons through relationships. Libra rules partnerships, from romantic/marriage partners to business partnerships and alliances. Libra also represents people and nations considered to be our enemies, as we project onto our allies and our enemies what we have difficulty understanding and expressing in ourselves. Libra prefers to seek a diplomatic solution to waging war in the hope that enemies could eventually become allies.

As part of the air element, Libra likes to communicate and socialize, particularly one on one in person. We must take responsibility for what we communicate as this can be just as harmful as using weapons. Saturn in Libra values old-fashioned manners and appropriate social conduct. It takes time and a sincere effort to establish and build meaningful business and personal relationships. Relationships that are not an equal give and take will end during this cycle, particularly around late July/early August 2010 when Jupiter and Uranus in Aries oppose Mars and Saturn in Libra. During Saturn in Libra we are at our best when we create beauty and harmony within ourselves and in our surroundings.

Previous Cycles of Saturn in Libra:
Saturn takes about 29 years to make a complete cycle around the Sun. The last three cycles of Saturn in Libra were:
September 21, 1980 – August 24, 1983
November 20, 1950 – October 22, 1953
October 7, 1921 – September 13, 1924

Saturn rules history and examining the events of the prior cycles reveals a few common themes that will be important in this cycle as well. The prior cycles saw advances in communications, media, and entertainment, from the first commercial screening of sound on film motion pictures, to color TV, MTV, and PCs. The internet increased the function and uses of the PC. During this cycle of Saturn in Libra computers and hand held devices will become fully integrated throughout homes and businesses. Saturn’s opposition to Jupiter and Uranus in Aries will bring new ways of communicating and innovation in engineering. New inventions will be inspired by or based upon historical discoveries. Many inventions being used by the military will be transformed for civilian use.

The last two cycles of Saturn in Libra required strong intervention and independence by the Federal Reserve to control inflation. The most recent cycle saw the highest rate of unemployment since the Great Depression, peaking at 10.8% in November/December 1982. Inflation will gradually rise, making a sharp and sudden spike by the middle of 2010. Saturn in Libra, along with Jupiter, Uranus, and Pluto will profoundly affect the Federal Reserve, transforming its scope and purpose as the Fed faces its biggest challenges since its founding in 1913.

All three cycles involved high volatility in tax policy and rates. The issue of taxation goes back to America’s founding in 1776 when Saturn was in Libra and Pluto in Capricorn, reflecting the Colonists desire to break free from British rule in what began as the unfairness of taxation without representation. Saturn rules government, and the first two paragraphs of the Declaration of Independence reflect the principles of Saturn in Libra at work in establishing a new nation.

Pluto in Capricorn reflects that the U.S. has been a debtor nation since its inception. Saturn in Libra challenging Jupiter, Uranus, and Pluto requires tough choices to be made to get a grip on the deficit. Societal attitudes will have to shift from tax policies that benefit special interests to a return to what truly benefits all citizens similar to Supreme Court interpretations prior to FDR’s New Deal.

Economic/Financial:
Business alliances, collaborative endeavors, and forming partnerships just for specific projects will tend to work out better than formal mergers.

The goal of Saturn in Libra is to create an economy that seeks to balance saving and borrowing.
Saturn in Libra accompanied by the transits of Jupiter, Uranus, and Pluto will fundamentally change the relationship between government and the financial system. In fact all companies that have greatly benefited from government assistance and subsidies at the expense of the overall economic good of the nation will face restrictions and societal obligations.

The era of the consumer-based economy is over; it is corporate America’s responsibility to lead the nation out of recession. Saturn in Libra along with Jupiter, Uranus and Pluto mark the beginning of a new cycle of business innovation and invention.

It is appropriate that Saturn enters Libra during the time of the year the Sun is in Pluto-ruled Scorpio since the first planetary aspect Saturn in Libra makes will be to Pluto in Capricorn on November 15, 2009.** The Saturn/Pluto alignment exposes secret financial arrangements of corporations and governments. This challenging alignment tends to dampen sentiment as people fully realize responsibility must be taken at the individual and collective level for paying off the debts of the past.

Reality sinks in that the economic quick fixes of excess stimulus and overly accommodative monetary policy give the illusion of working. Libra and Capricorn are cardinal signs that initiate new policies that require a painful adjustment in the short term in order to create a sustainable economy for the long term.

Libra rules bridges and connections. The stressful Saturn/Pluto alignment along with Jupiter and Uranus in Aries will likely see bridge collapses and other preventable disasters resulting from our long neglected decaying infrastructure.

Humans express either love or fear. If through our free will we choose to live our life with love rather than fear, then love is the law and there is no law beyond do what thou wilt. This is the highest expression of Saturn in Libra.

NOTE: Future posts discussing Saturn in Libra and its alignments with Jupiter, Uranus, and Pluto will be linked to this post as an addendum.

*Saturn will temporarily move back into Virgo from April 7- July 21, 2010. Saturn will next transit Libra September 5, 2039 – July 14, 2042.

**Saturn will again challenge Pluto on January 31 and August 21, 2010.

Picture of the Adjustment card from the Thoth tarot deck by Aleister Crowley; illustrated by Lady Frieda Harris.

WallStreetWeather.net Forecast For Week Of October 18, 2009

2009-10-18T18:55:00.001-04:00

Summary Of Last Week’s Influences:
Jupiter represents the global marketplace. As this expansive and optimistic planetary energy turned direct last week, most major global indices made new 52 week highs. Crude oil closed at $78.53, a new high for the year, up 120% from its March low. Gold reached a record high in dollar terms Tuesday, and topped $1,070 intraday Wednesday. Both of these commodities were driven higher as the dollar continued to decline.

Baseball caps with “Dow 10,000 2.0” were donned by floor traders on the NYSE when the magic moment occurred Wednesday. With Jupiter in technologically oriented Aquarius, the “2.0” was the right fit. Another way to view it is that the Dow has had a “lost decade” since its 1.0 break through the 10,000 level occurred on March 29, 1999. While Wall St. has viewed the last seven months as nothing but a rocket ride fueled by the Fed and the U.S. Treasury, as a New York Times editorial observed, no champagne corks were being popped on Main St.

Jupiter began moving forward Thursday. The indices reached new highs even though the parallel universes of Wall St. and Main St. began to converge as consumer-related credit losses impacted third quarter earnings from Bank of America (BAC) and Citigroup (C). Despite Wednesday’s stellar earnings from JPMorgan Chase (JPM), the consumer banking side showed disappointment with an additional $2 billion being added to reserves.

The Dow closed at 9,995.91 Friday, affected by disappointing earnings reports and a lower than expected reading in the October Michigan Consumer Sentiment Index. Jupiter conjoining hopeful Neptune for most of this year reflects consumers are more confident about current than future conditions. Jupiter expands and Neptune rules inflation. Consumer inflation expectations are higher than the Fed and most of Wall St. Saturn moving into Libra October 29 and challenging Pluto in Capricorn (exact November 15), reflects consumers underlying concerns about balancing their finances and their debt load.

That a hedge fund masquerading in Halloween costume as a bank fails to grasp why the public and some politicians are not ecstatic about their projected record compensation payouts shows how out of balance the financial system has once again become. With Goldman Sachs (GS) earning 80% of its profits from trading, there’s no pretense of any commercial or consumer banking activities.

Of course Goldman should be raking it in since their gains have largely come courtesy of the Federal Reserve and U.S. taxpayers. With Bear Stearns and Lehman Brothers gone, less competition equals higher profits for the remaining Wall St. banks. Zero interest rates, FDIC guaranteed loans, and “too big to fail status” have resulted in higher earnings.

Wall St, the Fed, and the government have failed to grasp the fact that you cannot solve a problem by recreating what got you into the mess in the first place! Saturn in Libra challenging Pluto in Capricorn over the next several months is about adjusting the scales back toward equilibrium before they break from being so strongly tilted to one side. If the financial system is as strong as the markets reflect, then Wall St. should welcome the Fed and government turning off the corporate welfare spigot.

Summary Of This Week’s Influences:
The week begins with the Libra New Moon that occurred at 1:33 AM EDT today. In the USA the emphasis is on all forms of communication, contractual agreements, and domestic travel and transportation. There’s a lot of chatter and movement within the local environment. Media outlets are working overtime to be the first to break major stories about each other as there could be new alliances and media M&A. Topics of media focus will be news about the military strategies the Administration is currently working on behind the scenes, as well as disclosures of previously secret military information.

All of these things are Mercury’s domain. Mercury in Libra harmonizes with Jupiter Tuesday and Neptune Saturday. With Mercury in Venus ruled Libra, earnings and economic news could be favorable enough to justify the market moving higher. However, Saturn in the area of the economy challenging Pluto in the area of the chart representing the stock market will start wielding its influence over the next month, as new information is reported on the government’s action regarding Wall St’s trading practices and entanglements.

The more sobering reality of Saturn and Pluto could force Wall St. to recognize that a glass half full is also a glass half empty and overly optimistic expectations need to be tempered by fundamental facts. The Dow climbing almost 55% from the March low back up to 10,000 was the easy part. Retracing the journey back up to “Dow 14,164.53 2.0” will be much, much harder.

Monday, October 19, 2009
Improving conditions in late morning to early afternoon; could weaken again in the last hour.

Tuesday, October 20, 2009
Strongest in the morning, then weakens in early afternoon; improves into the close.

Wednesday, October 21, 2009
Negative.

Thursday, October 22, 2009
Improving conditions as day progresses but predominantly mixed to negative conditions.

Friday, October 23, 2009
Negative trend bias.

The Drawn Out Drama of Mars in Leo: October 16, 2009 – June 8, 2010

2009-10-17T22:15:00.001-04:00

Published by WallStreetWeather.net
General Influences:
Mars is the energy that motivates us to get moving and take action to achieve the life we desire. Mars in Leo can provide a shot of self confidence and the courage to act on creative ideas. Actively engaging in physical and leisure activities you find enjoyable supports the immune system and gets creative juices flowing. Leo rules the heart, as well as matters of the heart. Attention and energy tend to be drawn to romance, children, speculation, entertainment and recreational activities during this cycle.

Mars was last in Leo May 9 to July 1, 2008. During Mars in Leo there’s a tendency to be melodramatic as a quick way to attract attention. With Saturn in Libra (October 29, 2009 to April 7, 2010) challenging Pluto in Capricorn during most of the transit, we can find more support for ourselves by being genuinely interested in others. Social interactions can foster creative collaborations that lead to recognition.

Mars Retrograde: December 20, 2009 – March 10, 2010
About every two years and two months, Mars appears to move backwards from Earth’s vantage point. Mars was last retrograde November 15, 2007 to January 30, 2008, but has not been retrograde in Leo since January 2 to March 24, 1995.*

Since Mars is all about action and moving forward, the Mars retrograde period can be frustrating as Mars energy likes to be on the fast track. Efforts tend to stall out and progress slower than normal when Mars is retrograde. Understanding this can help prevent anger and impatience erupting into an accident. Relationships can be challenging yet rewarding when Venus and the Sun oppose Mars January 27-29. Breakthroughs can occur if both sides are willing to swallow their pride.

Take action on major endeavors before December 20 or put them on hold until after March 10. It is especially important not to start something new at the same time that Mercury will be retrograde (December 26, 2009 to January 15, 2010). This time period is best for doing things that combine Mercury and Mars energies. Cleaning out and reorganizing your home and office or taking up a hobby/recreational activity you used to enjoy or never fully developed, are a couple of examples of working with the retrograde energies. If you’ve wanted to practice meditation or other relaxation techniques but find it difficult to mentally and physically be still to go within, this would be a good time to start.

Economic/Financial:
Leo rules all forms of speculation. Mars in Leo together with Saturn in Libra challenging Pluto in Capricorn, will see the government becoming more aggressive enacting and enforcing regulatory actions to reign in all types of speculation on Wall St. On the first day of Mars in Leo, the FBI charged billionaire hedge fund founder Raj Rajaratnam and five other executives at blue chip firms with insider trading. The case was the first time the FBI used wiretaps to pursue insider trading. Mars in Leo puts the spotlight on all chief executives, particularly those on Wall St. as well as the leaders of casinos and other gambling companies.

During the previous five cycles of Mars in Leo, the stock market’s performance has been lackluster to negative. Unless the stock market has continued its upward momentum unabated prior to Mars retrograde, the stock market could improve after early December and top out around the time Mars turns retrograde, particularly as optimistic Jupiter and hopeful Neptune will conjoin for the final time on December 21. The influences of Mercury retrograde and Saturn challenging Pluto (exact January 31) could erase any gains made prior to retrograde, and at a minimum the market could be choppy and go nowhere. Planetary stations tend to reverse current trading patterns, at least temporarily. Mars retrograde in Leo could slow down trading activity.

In the USA, attention and action will focus on all types of debt-related issues and efforts to help consumers cope with their debt burden. Interest rates and taxes will rise.

Geopolitical:
Mars in Leo puts the spotlight on actions taken by world leaders, especially concerning military endeavors. As a solar Leo, President Obama will be particularly impacted during Mars in Leo. President Obama will likely increase military actions in Afghanistan as he will be more confident to take risks. However, it takes greater courage to know when it’s time to retreat which is a good thing to do when Mars is retrograde.

Besides Afghanistan, countries that will likely be featured during Mars in Leo are: China, Egypt, India, Indonesia, Iraq, Iran, Israel, Jordan, Lebanon, North Korea, Pakistan, and Syria.

For those who like to plan ahead, Mars will be retrograde in Virgo from January 24 to August 14, 2012.

*Mars began the 1995 retrograde in Virgo, moving back into Leo. The last time Mars was fully retrograde in Leo as it will be during this cycle was from October 12, 1962 to March 16, 1963.

WallStreetWeather.net Forecast For Week Of October 11, 2009

2009-10-11T22:35:00.001-04:00

Summary Of Last Week’s Influences:
Friday marked the two year anniversary of the Dow (14,164.53) and the S&P500 (1,565.15) closing at record highs. The Dow celebrated by closing at a fresh 2009 high (9,864.94), but at 1,071.49, the S&P stopped short of beating its September 22 close. Both indices were slightly shy of surpassing their September 23 intraday highs. It also marked the first time since June 2007 that so many stocks (1,069) closed at 52 week highs.

The fact that financial markets have defied fundamentals reflects that once again the Federal Reserve has enabled asset inflation. Venus rules currencies, and Mercury represents exchanging one currency for another and the news traders react to. The euro and other currencies gained Monday after G7 finance ministers meeting over the weekend expressed no concern about the weaker dollar.

For all the talk about the dollar, the dollar is still above its closing low against the euro ($1.5981) set on April 22, 2008. On that day, Mars in Cancer harmonized with Uranus in Pisces; October 4 marked the first time Mars in Cancer harmonized with Uranus since then.

The dollar hit a fresh 2009 low against several currencies Thursday as Mercury conjoined Saturn which prompted the central banks of Thailand, S. Korea, Taiwan, and the Philippines to intervene to stem the appreciation of their currencies against the dollar. Uranus has a tendency to reverse direction, and the dollar slightly strengthened after Fed Chairman Bernanke said in a Thursday night speech that the Fed will have to tighten monetary policy “at some point.”

Mercury conjoining Saturn in Virgo represents news about healthcare. Health insurance company stocks rose when these two planets first conjoined August 17 on the belief the public option would be scrapped. On Thursday’s third alignment, these stocks fell over concerns that health overhaul will pass Congress. Mercury conjoining Saturn can represent somber news and in Virgo this can mean a contraction in the number of jobs available. The Labor Department reported that the number of job openings declined in August to 2.4 million from 4.65 million in August 2008, as job separation outpaced new hires.

As Venus (diplomacy) opposed Uranus (surprises; outer space) Friday (a day ruled by Venus), America woke up to the unexpected news that President Obama won the Nobel Peace Prize. And with the Moon in Gemini, the sign of the twins, NASA was smashing two spacecraft four minutes apart into the south pole of the Moon early Friday morning as if we were at war with our lunar neighbor (Gemini). The purpose of NASA’s LCROSS mission is to find water on the Moon that would support future human missions to the Moon and Mars. With the Moon exactly conjoining the USA Mars at the time of Friday morning’s impact, this is a military mission.

After the President gave a speech Friday about winning the peace prize, he met with his war council for three hours to discuss Gen. McChrystal’s request to double the U.S. military presence in Afghanistan.

Summary Of This Week’s Influences:
From Monday through Wednesday Jupiter appears to be motionless from Earth’s vantage point, making its energies more pronounced. Jupiter expands and tends to exaggerate current sentiment, creating the potential for large market moves (in either or both directions).

Jupiter turned retrograde on June 15. Commodities dropped and the dollar strengthened that day. Stocks dropped June 15-16 in the market’s first weekly decline in five weeks. For the most part, Jupiter energy is optimistic and has high expectations. Jupiter turning retrograde reversed the bullish sentiment. The June 15 cover of Barron’s proclaimed the market had gone “Too Far, Too Fast.” (See the June 22 Weekly Forecast for additional economic events connected to Jupiter turning retrograde.)

Jupiter retrograde proved to be a very minor and very temporary pullback, as stocks have continued their upward trajectory since then to reach new highs for the year while the dollar made a new low for 2009. Jupiter in Aquarius turning direct could bring some unexpected developments in the areas of foreign relations and trade, legal rulings, higher education, religion, and politics. People tend to feel more confident now, but it’s best to wait to put plans into action until October 20 after 5 PM EDT through October 22.

During Jupiter retrograde, Republicans revealed that their real agenda is not only to defeat healthcare reform, but make President Obama appear totally ineffective. As Jupiter turns direct on Tuesday, the Senate Finance Committee will meet at 10:00 AM to vote on their version of the healthcare reform bill. The Committee was scheduled to vote on the bill last week, but Sen. Olympia Snowe said she needed more time to review the bill. This is despite the fact that a majority of people in Maine want a public option since Anthem Blue Cross dominates the individual market. Venus represents women, Saturn is time, and Virgo is healthcare. Venus conjoining Saturn reflects Sen. Snowe’s stalling strategy. And Venus challenging Pluto could mean that appeasing her might require a high price tag.

Venus represents money, banking, and values. Venus will conjoin Saturn (Tuesday), shift into “home” sign Libra on Wednesday, and challenge Pluto in Capricorn on Thursday. These influences will affect the chart of the Federal Reserve. Several Fed officials will be giving speeches and testimony this week, and on Wednesday the Fed will release the Minutes from the September 23 FOMC meeting. These influences could create more volatility in treasuries and market interest rates.

All of these planetary influences reflect the topics that will be debated at Wednesday’s Congressional hearings. The House Financial Services Committee will hold a markup session on the bill creating the Consumer Financial Protection Agency (CFPA), as well as the bill to reform the OTC derivatives market. Meanwhile the Senate Banking Committee will be “examining the state of the banking industry,” as Chairman Christopher Dodd plans to have a bill ready for the Committee to markup in November to be ready to take to the Senate floor early in 2010. This exactly coincides with the time when Saturn in Libra will be challenging Pluto, placing regulations that restrict financial institutions from continuing past practices in high leverage and opaque instruments.

The market could react cautiously to remarks about the financial system made by government officials as Venus conjoins Saturn Tuesday. (National Council of Economic Advisors Chairman Christina Romer will be speaking Tuesday morning, and there will be speeches by Fed Vice Chairman Kohn and NY FRB president Dudley.) Venus conjoining Saturn in Virgo can raise concerns about consumers’ limited ability to spend on discretionary items, putting stocks under some selling pressure.

Venus enters Libra Wednesday evening until November 7, putting the focus on financial relationships and partnership arrangements. People tend to be more socially focused now, especially with the New Moon in Libra this weekend and Mercury in Libra until October 28.

Venus challenging Pluto in Capricorn Thursday could reveal financial information or arrangements that had been kept secret. There could be speculation about mergers, along with a sharp moves in oil and gold prices.

Mars is action. Mars in Cancer conjoins the degree of the July 21 Solar Eclipse, reactivating the themes highlighted then. The eclipse conjoined the Fed’s natal Neptune (interest rates), the day that Fed Chairman Bernanke wrote a Wall Street Journal op-ed on the Fed’s “exit strategy.” Mars conjoining the eclipse pushes to act faster to adjust monetary policy.

Mars moves into Leo Friday morning until June 7, 2010 (due to Mars being retrograde from December 20 until March 10). I will be writing more about this cycle; here’s a post from the last time Mars was in Leo.

Monday, October 12, 2009
Negative trend bias, but improves as the day progresses.

Tuesday, October 13, 2009
Potential for big moves/reversals in either or both directions. Venus conjoining Saturn is likely to inject caution, keeping the market in negative territory at least in the morning.

Wednesday, October 14, 2009
Positive, then weakens to choppy/mixed to negative. Could improve going into the close.

Thursday, October 15, 2009
Weak early, then improves as day progresses. Indices close mixed to positive.

Friday, October 16, 2009
(Options expiration) Choppy/mixed to mostly positive.

Asset Inflation: The Missing Indicator In Economic And Monetary Policy

2009-10-10T16:08:00.002-04:00

Published by WallStreetWeather.net
Although statements have been made by some Federal Reserve officials such as Kevin Warsh and Thomas Hoenig that interest rates will have to rise sooner and faster than the market expects, the Fed continues to reiterate that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

High unemployment and concerns about deflation are holding the Fed back from raising rates from nearly zero percent. Going by the Fed’s favored measurements of inflation that exclude or give less weight to all the products and services consumers need to survive, it will be some time before the Fed acknowledges that inflation exists and must be tamed with tighter monetary policy.

One key indicator of inflation that economists as well as Ben Bernanke and his predecessor Alan Greenspan refused to acknowledge is asset inflation. Nearly zero interest rates “for an extended period” are creating asset inflation as investors seek higher returns from stocks, commodities, and the Treasury market.

Greenspan continues to warn that the government should not over regulate financial markets since a major financial crisis only comes along “once every hundred years.” Beyond the Maestro’s memory lapses (1997 Asian crisis, 1998 LTCM, 2000 tech wreck, and the 2007-08 credit and housing bubbles we’re still mopping up), highlights the importance of factoring asset inflation into monetary policy. Greenspan believes if bank capital requirements included long tail events, the banks would not be profitable enough in good times.

Economists and Fed officials would no doubt claim it is impossible to measure what part of asset prices are truly inflated versus real increased worth. But dissecting asset inflation versus real growth is not that difficult.

Looking at the stock market, if certain individual stocks increase in value while the remaining stocks do not, those individual stocks might be moving higher based on fundamental factors such as sales growth. If the entire market is rising in unison, than either economic fundamentals must be strong (low unemployment, etc.) or a bubble is forming. The latter reflects the presence of inflation in the stock market.

Commodity prices, particularly in precious metals and crude oil, are also exhibiting asset inflation. When you strip out current and short term industrial needs, you are left with inflation. Demand for gold jewelry is way down, yet gold topped $1,055 this week. According to the IEA, OPEC is producing 1.6 million barrels a day above their 24.845 million barrels a day. And oil trading companies, refineries, and banks such as Goldman Sachs (GS) are paying to store vast amounts of crude oil in offshore tankers. While crude prices have dropped from their mid-2008 peak, oil prices hovering in the $65-75 a barrel range does not reflect the utility demand relative to supply. Treasuries are behaving very much like commodities and precious metals; all three are gold alternatives.

It would not have been difficult to calculate the high level of asset inflation present during the housing bubble either. Yet as a member of the Fed Board of Governors at the time, Bernanke believed that improving economic fundamentals were behind the rapid increases in home prices throughout the nation.

If a handful of homes in a neighborhood are selling at higher prices because the sellers have added value in some way, or certain external dynamics (for instance, more employment opportunities in the area) increased the value of an entire neighborhood, then property values are increasing due to fundamental factors. But during the boom years virtually every home, neighborhood, city, state – in essence the entire nation’s house prices - rapidly increased in value. Condition was not even a factor.

If the Fed factored in asset inflation in setting monetary policy, Greenspan could have never kept interest rates at 1% for so long. Nor could he have so slowly raised rates a measly 25 basis points at a time.

The current Fed feels monetary policy can remain overly accommodative until the velocity of money increases because their measure of inflation does not include asset bubbles. But the danger is that money velocity can change far more rapidly than the Fed can withdraw liquidity from the currency supply. The world has already lost confidence in our “strong dollar policy” so that when the export dominated countries realize that our consumer economy will never return to what it was, they will stop supporting our currency. This will reduce consumer spending recycled into treasuries from China and friends leading to the real collapse in the dollar.

Hopefully the world will force our stubborn and arrogant Fed to act responsibly.

No disclosures.

WallStreetWeather.net Forecast For Week Of October 4, 2009: “Baby Bear Is Growing” Edition

2009-10-04T18:26:00.006-04:00

Summary Of Last Week’s Influences:
After Monday’s market rallied on the news of almost $30.7 billion in M&A deals, stocks resumed their downward descent that began on the first trading day after the Autumnal Equinox.

Rather than reversing the pessimistic outlook that began during Mercury retrograde, financial markets continued the pattern of the prior week where stocks attempted to rise and then reversed on disappointing economic reports. If the stock market continues to decline after October 14, this will confirm that the bearish trend was not a short term Mercury retrograde phenomenon.

Some market commentators have referred to the market’s recent weakness as a “reality check.” This describes the cautious and contracting nature of Saturn. Saturn opposed Uranus (future projections) for the third time on September 15. I’ve previously written that each time Saturn in Virgo opposed Uranus in Pisces (November 4, 2008 and February 5, 2009), the stock market has been positive on those days, but then loses momentum and turns bearish. (After the first two oppositions, the indices dropped to multi-year lows within four weeks.)

Last week’s economic reports showed that a lack of fundamentals (Saturn) cannot provide the rocket fuel (Uranus) to propel the market into new territory, despite the Fed’s overly accommodative policies. September data for Consumer Confidence dropped as the influence of Jupiter (optimism; growth) conjoining Neptune (hope; illusion) which was strong in the spring and summer,* became overshadowed by Saturn opposing Uranus and Saturn approaching a challenging alignment to Pluto in Capricorn (exact November 15).

Virgo represents the workforce. Virgo is the bookkeeper, striving to be as cost conscious and efficient as possible. Friday’s employment report showed a loss of 263,000 jobs and a 9.8% unemployment rate. The average work week was 33 hours – a record low. This data ties into Thursday’s Chicago PMI report that showed new orders contracting. So much for the bullish case that 3Q earnings which kick off this week will show increased revenue based on inventory restocking. If consumers don’t have a job or they’re concerned they might not have a job or are not working enough hours, why does Wall St. continue to believe they’ll suddenly have the ability to spend as they did in the past? Unlike past recessions, consumers are loaded up with more debt than ever with less access to credit and can no longer use their home as an ATM machine. Most retailers seem to be of the mindset that they would rather run the risk of being out of stock than overstocked. Such is the parallel universe of Wall St. and Main St.

If bulls want to keep the rally going, perhaps they’ll want to project earnings out into space. In 2020, Saturn will conjoin Pluto, followed by Jupiter and Saturn conjoining in Aquarius, ushering in a whole new economic cycle. :-)

*Exact May 27, July 10, and December 21, 2009.

Summary Of This Week’s Influences:
The Harvest Full Moon in Aries occurred at 2:10 AM EDT today; its influence will be felt for the next two weeks. Aries is ruled by fast-acting Mars. In the chart for the USA, much of the action is taking place behind the scenes, especially regarding military matters and foreign relations. Outwardly, the Administration will be focused on financial regulatory reform. There could be some surprising unpleasant news relating to stable credits. The stock market will be volatile and predominantly bearish.

Mercury (thoughts/communication) opposes Uranus (sharp and unexpected movements) today, and then conjoins Saturn on Thursday for the third and final time. Markets made new highs the first time Mercury opposed Uranus on August 21. During the second pass on September 23 when Mercury was retrograde, the indices made fresh 2009 intraday highs before abruptly reversing to negative.

Mercury conjoining Saturn tends to pessimistic thinking. Mercury conjoined Saturn August 17 when the indices declined to their lowest levels since early July. Just as Mercury/Uranus reversed course during Mercury retrograde, the stock market was positive on September 22 when Mercury again conjoined Saturn.

Thursday is when retailers report chain store sales for September which the market anticipates will be better due to the back to school season and cooler weather in the northeast in early September. (From a weather standpoint, Mercury conjoining Saturn indicates cooler temperatures.) Mercury conjoining Saturn compressed retailers’ margins; shoppers were discriminating in purchasing only discounted merchandise. The bait and switch does not work with these planets in cost conscious Virgo.

Health matters are ruled by Virgo, and health insurers were about the only sector that was positive on August 17 as investors thought the public option would be scrapped. Last Tuesday when Mercury turned direct, the Senate Finance Committee (whose members have received millions from health insurers), rejected two amendments that would have called for a public option in some form. This week the Committee is scheduled to vote on the bill. Even if Congress passes healthcare legislation without a public option, health insurers and Wall St. should not view this as a reason to celebrate. As health insurance companies receive an increase in government subsidies to get more Americans covered, the costs will become so high that the government will have to legislate (Mercury) rules that limit (Saturn) premiums and provider reimbursements. Despite the opposition’s rhetoric, not having a public option will be a worse fate for the health insurance companies than having one.

On Friday Venus opposes Uranus and Mercury re-enters Venus-ruled Libra (previously August 25 to September 17) until October 28. Venus is money, banking, and liquid assets. The Libra side** of Venus represents our relationship with money and the components of financial alliances. This includes partnerships, and counterparties that comprise financial markets. When planets are in Libra, the market has to decide what it deems to be “fair value” or pricing which is a balance between fundamentals (Saturn) and future projections (Uranus).

**Venus also rules Taurus.

Monday, October 5, 2009
Negative trend bias, but could improve to choppy/mixed conditions.

Tuesday, October 6, 2009
Negative, then could see a turnaround approaching midday to choppy/mixed conditions.

Wednesday, October 7, 2009
Negative, but could see improvement/reversal around midday before declining again.

Thursday, October 8, 2009
Improving conditions as day progresses.

Friday, October 9, 2009
Market choppy and volatile as it swings between negative and positive; likely closes up.

**Venus also rules Taurus.

Picture of Atlanta Zoo giant panda cub Xi Lan.

Ken Lewis Allowed To Retire With Dignity

2009-10-01T20:44:00.007-04:00

Published by WallStreetWeather.net

During a 5:00 PM Board meeting yesterday, Bank of America (BAC) CEO Ken Lewis told the Board in a telephone call that he will retire from the bank and from the Board of Directors at the end of the year to allow BofA time to select his successor.

Mercury represents our thought process and how we communicate. Mercury conjoined Saturn in Virgo in mid August, opposing Ken Lewis’ natal Mercury in Pisces. Virgo can be critical as this energy demands accountability. Mercury and Saturn in Virgo, together with Mars in Mercury-ruled Gemini then, indicated that Lewis was feeling the criticism and pressure (Mercury) from governmental authorities (Saturn) to take action (Mars) by leaving gracefully. The Wall Street Journal confirms this, citing a person “close to” Ken Lewis who said Lewis was “fed up with the criticism that haunted him following the takeover of Merrill Lynch.”

Unless contradicted by other factors in the natal chart, people with Mercury in Pisces can tend to do their best thinking when they are engaged in and/or spending time in environments they consider to be an “escape” from the everyday world. For Ken Lewis, ending the summer in the mountains provided “time to reflect.”

The three week period three to four times a year when Mercury is retrograde* provides an opportunity to reflect and review matters that have yet to be completed or fully resolved. Mercury turned retrograde on September 7; the Journal indicates that Lewis “made the decision to quit after Labor Day after returning from vacation.”

Ken Lewis’ resignation comes one day after Mercury turned direct in Virgo exactly opposite his natal Mercury. One year ago when the September 15, 2008 Pisces Full Moon conjoined his natal Mercury, Lewis thought his seven year dream had come true in acquiring Merrill Lynch.

Soon the dream began unraveling into a nightmare for Ken Lewis. As Merrill’s losses accelerated more than anticipated, BofA wanted to find a way out of the mess even though shareholders had just approved the merger. In order to avoid injecting even more systemic risk into already fragile financial markets, BofA received an additional $20 billion and a loss sharing provision to cover $118 billion in assets in a deal engineered by Fed Chairman Bernanke and then Treasury Secretary Paulson, but kept quiet until BofA reported Q408 earnings on January 16, 2009.

Ken Lewis as well as sources quoted in the Journal state that “there was no government pressure” on him to resign. But investigations by the House Oversight Committee, New York Attorney General Cuomo, a lawsuit by Ohio Attorney General Richard Cordray on behalf of five pension funds, and a looming February 1 court date with Judge Jed S. Rakoff who refused to approve BofA’s agreement to pay the SEC $33 million for failing to disclose the payment of Merrill bonuses in the merger proxy filing sent to shareholders, have drawn undue attention to BofA and particularly Ken Lewis.

Jupiter (courts) and Neptune (fraud) challenge Lewis’ natal Jupiter in Scorpio, and reflects Lewis hiring his own defense attorney, as it has been reported that Cuomo might be preparing civil fraud charges against him.

In a January post on the BofA/Merrill merger, I predicted that Ken Lewis might announce his retirement at the time of his 62nd birthday April 9. Lewis vowed to stay on, and was stripped of his Chairmanship at BofA’s April 29 annual meeting. By staying on, Lewis can say he was at the helm when the bank’s fortunes turned around during the six month financial bull run.

Ken Lewis is not a hero for buying Countrywide Financial and Merrill Lynch. And he is not a villain for doing what he believed and the bank’s regulators believed would cause the least amount of systemic risk to the financial system. The Merrill bonus payments should have been disclosed as part of the SEC filing, but the majority held shares owned by institutional shareholders would have approved the merger anyway.

The sad saga behind the BofA/Merrill Lynch merger is that Merrill Lynch could no longer stand on its own, due in large part from the problems brought on by its previous boss, Stanley O’Neal. As Saturn enters Libra October 29 and challenges Pluto in Capricorn over the next year, rather than making one person the sole scapegoat, it is time to learn the lessons of this experience to build a new regulatory framework that would not have allowed Merrill to accumulate vast quantities of high risk assets purported to be safe.

Libra is the sign of balance, and the interesting balance that BofA had to weigh with Merrill Lynch is that if it waited for Merrill to be more stressed to achieve a lower price, retail clients in Merrill’s crown jewel wealth management division would have started bolting. If this was the focus of BofA’s desire than we might not be able to blame Ken Lewis for overpaying to keep Merrill whole. This situation differs greatly from Barclays (BCS) acquiring Lehman Brothers at a bargain because the businesses Barclays acquired were not directly subject to a run on the bank. Perhaps BofA could have gotten Merrill substantially cheaper but at what price to Merrill’s retail client base?

If Ken Lewis was strictly trying to buy an investment bank, there’s no question that BofA overpaid for Merrill. But if he was looking to purchase a retail brokerage with its clientele intact, then it’s more likely he paid a fair price for Merrill.

*Planets do not really move backwards, but appear to from Earth’s vantage point.

No disclosures.

WallStreetWeather.net Forecast For Week Of September 28, 2009

2009-09-27T18:59:00.003-04:00

Summary Of Last Week’s Influences:
Mercury retrograde periods tend to interrupt trends in place prior to the retrograde. Since Mercury turned retrograde September 7, most of this period has continued the trends established prior to retrograde: rising equity prices, falling dollar, higher commodities – particularly gold, silver, and oil.

In last week’s Forecast I noted the planetary shifts and alignments that would increase market volatility and reverse trends. On the first trading day following the Autumnal Equinox, the major indices reached new 2009 highs while the dollar hit a fresh 2009 low following the release of Wednesday’s FOMC announcement. Suddenly stocks reversed, the dollar gained strength, and commodities weakened.

Information previously held in secret can get revealed during Mercury retrograde. (And new information released during Mercury retrograde tends to get revised or reversed after Mercury has begun moving forward.)

I wrote last week that the Sun challenging Pluto would bring information on nuclear issues and possibly some M&A activity. Leading his first meeting of the U.N. Security Council, President Obama got the Council to unanimously approve the “clear-safeguards” resolution, establishing the framework to take action against nations that use nuclear technology for military purposes. At the G20, President Obama revealed what he had been briefed on shortly after he won the election: that Iran has built a secret nuclear facility buried deep at an Islamic Revolutionary Guard base in the holy city of Qom.

It’s particularly important to be as clear and concise as possible when communicating during Mercury retrograde to avoid misunderstandings. The Sun represents leaders and chief executives, and with the Sun in Venus-ruled Libra (sugar/sweets), Cadbury CEO Todd Stitzer found this out the hard way when he “admitted there is some strategic sense in combining” Kraft and Cadbury, at a Bank of America investor conference in London on Wednesday. Two days later Stitzer said his views were “misconstrued.”

One M&A deal that was official last week is Dell’s (DELL) acquisition of Perot Systems (PER) for $3.9 billion. Speculation about Microsoft (MSFT) making an acquisition seems to surface when Mercury is retrograde, perhaps because the company went public years ago when Mercury retrograde. This time the speculation is Microsoft will acquire Electronic Arts (ERTS).

Last week NASA scientists rediscovered water molecules on the Moon. I say rediscovered as the Moon and its sign Cancer are part of the water element, representing our emotions, market sentiment, and consumer behavior. For instance, when we’re highly emotionally charged, our eyes get watery and produce tears.

Mars rules the color red and is hot and dry influence. Mars in Cancer (August 25 to October 16) creates weather conditions of draught and wildfires in some parts of the country while other areas are flooded with water. So it’s fitting that with Mars in Cancer, NASA would reveal more information about frozen water on Mars.

With Pluto in Capricorn (2008-2024), more discoveries will be revealed about what’s buried beneath the soil of the Earth, its satellite and the other planets in our solar system.

Summary Of This Week’s Influences:
After appearing from Earth’s vantage point to move in reverse since September 7, Mercury turns stationary direct Tuesday at 9:14 AM EDT.

Mercury turning direct on the USA’s challenging Mars/Neptune alignment, as well conjoining President Obama’s natal Mars reflects the Administration must determine soon what military action to take with our adversaries in Afghanistan. Mars challenging Neptune in the USA chart indicates that military action (Mars) in the name of idealism (Neptune) such as Vietnam, Iraq, and Afghanistan has never proved to be successful. President Obama must decide if we’re in Afghanistan to “nation build” or annihilate the Taliban and Al-Qaeda before determining the size and scope of the military effort. Since President Hamid Karzai might not represent a government we can “believe in,” it’s difficult to justify a nation building effort. The future of nation building has probably past; it’s more likely we will become “the terrorists to the terrorists.” The smartest strategists learn from their enemies.

Will the “faith-based rally” as David Rosenberg calls it, continue once Mercury begins moving forward? I think the bear is getting ready to awaken from hibernation – he’s just been a bit delayed.

Sir John Templeton once said, “The four most expensive words in the English language are ‘this time it’s different.’” Frankly, this time it truly is different. The Fed dropped interest rates to near zero and established all kinds of lending programs. Yet banks aren’t lending, and this time consumers are truly tapped out. What the Fed and the government still doesn’t get is that the traditional means of stimulating the economy will only have a temporary effect since the U.S. will not return to being a heavily consumer-based economy.

The next phase of the financial crisis will arrive when the current asset bubble bursts, since the Fed has already used up all its ammo. With Pluto in Capricorn, establishing a solid and sustainable economic foundation will take time. The government will have to continue to play a leading role in bringing about the massive transformation of the economy by confronting issues that politicians have put off for too long: healthcare reform, infrastructure and clean and cost efficient energy sources that support how we’ll live and work in the years to come.

Jupiter, Saturn, Uranus, and Pluto will be dynamically “interacting” with one another in full force less than one year from now. As these planets will be at the beginning of cardinal (action) signs, it will be time to make a fresh start in these areas. Since 2007, we have been in a “clean up phase” as the old ways of doing business and operating the economy will be ending. This is what the cycle of oppositions between Saturn (status quo) and Uranus (reform/revolution) from November 2008 to July 2010 is all about. Individuals, groups, and businesses who are working to maintain the status quo by engaging in extremist (Uranus) tactics may believe that is the way to “freedom” (Uranus), but they are the ones who will actually be left behind.

Aquarius rules space travel, and with the Moon in Aquarius and Mercury the messenger turning direct Tuesday, NASA’s MESSENGER spacecraft will make its third and final flyby of Mercury before entering Mercury’s orbit in 2011.

As above, so below. :-)

Monday, September 28, 2009
Indices choppy/mixed, vacillating between negative and positive; likely closes down.

Tuesday, September 29, 2009
Negative trend bias, but could see improvement in final hour.

Wednesday, September 30, 2009
Market improves as day progresses; closes up.

Thursday, October 1, 2009
Up early, then becomes choppy/mixed to negative.

Friday, October 2, 2009
Positive trend bias in the morning, then becomes choppy/mixed and likely turns negative by late afternoon.

No disclosures.

Financial Markets Reverse on the Fed’s Mortgage Message

2009-09-24T20:25:00.002-04:00

Published by WallStreetWeather.net
As described in the Weekly Forecast, stocks and the dollar made a sharp and sudden reversal yesterday afternoon, as Wall Street rethought their initial bullish reaction to the FOMC announcement. After climbing 88.12 points to a fresh 2009 high, the Dow reversed, closing down 81.32 points to 9.748.55. And after hitting a new 2009 low, the dollar reversed.

What was “profound” is that the Fed has unequivocally telegraphed that long term interest rates are on a gradual trend up and short term interest rates are being protected at near zero for at least the next several months. This indicates a gradual unwinding of the Fed’s balance sheet and the transition of the finance industry from direct Federal Reserve support through the purchase of their securities.

In addition to what I wrote about Saturn challenging Pluto forcing the Fed to contract its purchase of mortgage securities, Saturn/Pluto represents the need for the Fed to slowly (Saturn) unwind the lending (Pluto) programs the Fed created to expand the type of collateral and duration of its discount window lending. This morning the Fed released a schedule that gradually scales back the Term Auction Facility (TAF) and the Term Securities Lending Facility (TSLF). The Fed will reduce the maturity dates “by early next year to a single cycle of 28-day funds offered every 28 days.” The Fed will also “assess whether to maintain a TAF on a permanent basis.”

Today the stock market reversed its early gains at 10:00 AM after the Fed released the new TAF and TSLF schedules, the same time data on August existing home sales was released that showed a decline instead of an anticipated increase in sales. The fact that slightly over one third of existing home sales continue to be for “distressed homes” and that 70% of homes sold were priced below $200,000, says that even with the Fed supporting low mortgage rates combined with the government’s homebuyer tax credit,* most homes for sale in most sections of the country are still not properly priced.

According to mortgage data tracker HSH Associates quoted in the WSJ Ahead of the Tape column, without the Fed’s support the national average conventional fixed rate mortgage would be about 5.9% vs. around 5.04% now. Once the Fed concludes its purchases by the end of the first quarter of 2010, I think it is more realistic to expect that mortgage rates will gradually rise to the 6.5% to 7% range.

Slack in economic terms represents a lower than normal level of resource utilization. Resources include everything from labor, factories, unoccupied homes and apartments, to unsold motor vehicles. The important thing to note about resources is they’re not fungible; excess capacity in one area of the economy cannot be matched with overused capacity in another. Some forms of capacity can simply grow stale and never be used again.

Excess capacity in the auto industry provides no relief to the need for next generation semiconductor manufacturing, just as excess capacity in luxury housing and luxury hotel rooms cannot easily be transformed into utilitarian housing and utilitarian hotel rooms. Any discussion of “slack” controlling inflation has limited utility itself.

You can still have inflation with excess capacity when operating costs are rising, a situation experienced in the stagflation of the 1970s to early 1980s. A prime example is a house or condo that could be purchased for under $200,000 that has homeowner fees, utility costs, and taxes as high as $1,000 per month.

The Fed “expects that inflation will remain subdued for some time.” With expansive Jupiter conjoining Uranus in 2010, sharp and unexpected price spikes could bring a sudden whiff of ‘70s style stagflation as some areas of the economy operate with excess capacity and other areas are more stressed.

*Banks and the real estate industrial complex have been lobbying hard for Congress to extend this program authorized under the stimulus bill beyond November 30. Republican Senator John Isakson has reintroduced his Senate bill to not only extend the tax credit until the end of 2010, but increase the credit to $15,000 and eliminate the “first time” buyer clause. For all of the opposition’s rhetoric about “government-run healthcare” and complaints that healthcare reform will increase the federal deficit, it’s interesting that deficits fly out the window when it comes to real estate. And somehow government sponsored housing subsidies do not infringe on their so-called free market capitalism.

Financial Markets and the Autumnal Equinox

2009-09-22T22:50:00.003-04:00

Published by WallStreetWeather.net
Autumn began in the northern hemisphere at 5:19 PM EDT today when the Sun entered Libra. Libra represents balance, and at the Equinox the hours of day and night are equal in length.

Although financial markets do not always decline in the autumn (the DJIA and the S&P 500 reached record highs in October 2007), Wall Street has a tendency to equate the beginning of Fall with a fall in the stock market. As Barron’s columnist Randall Forsyth describes in “It’s the First Day of Fall – In More Ways than One,” “the number of huge reversals that took place on or about that date is stunning.”

The Sun represents speculation. Libra is ruled by Venus, the planetary ruler of money, banks, and moveable assets. As the ruler of all types of relationships, arrangements, and alliances, Libra represents parties coming together to reach agreement on a fair exchange of value. Financial relationships broke down one year ago when counterparties refused to trade with one another and banks refused to lend to one another.

Cardinal signs* such as Libra usher in the start of each season. These signs initiate new developments and take action on existing matters. Libra is an air*** (mental) sign, and during the Fall season (September 22 to December 21**), being out in the crisp clear air can help to clear people’s thinking regarding whether financial values have become out of balance in one direction or the other.

The New Year actually begins at the Vernal Equinox (around March 20) when the Sun enters Aries, the first sign of the zodiac. The Sun represents the life force, and the Sun in Aries expresses bold self-confidence and enthusiasm, eager to start something new. In Aries’ opposite sign Libra, the Sun’s sense of self-identity is shaped through outside influences and relationships with others. Financial markets have a full plate of news to digest now as they focus on year end. Congress is always in session during this time and the Supreme Court begins a new session the first Monday in October of each year (Libra is symbolized by the scales of justice and equality). And the start of each new season brings quarterly earnings reports.

After Art Cashin, director of floor operations for UBS Financial Services, mentioned the Autumnal Equinox on CNBC’s Squawk Box this morning, Joe Kernan began making silly comments about how the Full Moon “sucks our brains up into our head.” The Moon rules our emotions which can get highly charged and go to extremes at the Full Moon as it marks the peak of the Moon’s monthly cycle when the Moon opposes the Sun. The Autumnal Equinox functions as a “seasonal Full Moon,” as Libra marks the halfway point in the cycle begun at the Vernal Equinox (“New Moon”). What’s happening now grabs our full attention.

Mercury represents thoughts and communications, and Mercury was retrograde during or just prior to the time of many of the biggest market reversals, such as the 1929 and 1987 crashes. (Mercury is retrograde until September 29.) Planets shifting into new signs or planets appearing to change direction from Earth’s vantage point at the time of the Autumnal Equinox tend to increase the chances of a market turning point. The Sun rules gold. Venus (money) moved into Libra conjoining the Equinox Sun at the same time Saturn (government) turned direct in 1931 when the British government took the pound off the gold standard. Gold stocks peaked at the 1980 Autumnal Equinox when Saturn entered Libra; Saturn will return to Libra for the first time since then on October 29.

Other factors contributing to the propensity of market reversals are due to the Libra Sun and other planets in cardinal signs forming challenging alignments to cardinal planets in the USA and NYSE charts at the same time eclipses or other major planetary alignments are present.

Planetary cycles repeat themselves but express their energies differently each time. During the early 1930s, Saturn (economic contraction; government), Uranus (shocks/sharp price movements; reforms), and Pluto (extremes; wealth/bankruptcy) formed challenging alignments to each other in cardinal signs. In 2010 these three planets will once again enter cardinal signs and Uranus will be in Aries for the first time since the Great Depression.

Since the Sun rules speculation, it is not surprising that market watchers follow Sunspot activity beyond its effect on communications and weather patterns. The Sun in 2008-09 has been in the solar minimum part of its 11.1 year cycle of activity, the lowest level since 1913. (The early 1930s were also a period of solar minimum.) Art Cashin mentioned that today marked the sighting of a second sunspot that has formed on the Sun, part of Solar Cycle 24 predicted to peak in May 2013.

Frequent reversals are common in financial markets during the time Mercury is retrograde as the market tends to lack a clear sense of direction. The Barron’s article talks about being prepared for market reversals, particularly in the currency market. In a previous post I described how the Sun challenging Pluto in Capricorn and Mercury opposing Uranus on the day of the September 23 FOMC announcement could reverse currency markets, affect foreign purchase of Treasurys, and contract the amount of mortgage securities the Fed purchases. Planets entering cardinal signs influence Fed policy actions; transits by Pluto, Saturn, and Uranus between 2008-11will totally transform the “purpose and scope” of the nation’s central bank.

The indices celebrated this Autumnal Equinox by making new 2009 closing highs. The Fed’s constant reiteration that record low interest rates are likely to remain low for an extended period of time, along with its purchase of Treasurys and mortgage securities, has provided the rocket fuel for the stock market, the bond market, and commodities reacting to the weaker dollar.

Whether or not the bear market returns this autumn remains to be seen. Financial markets have the potential to make more pronounced market moves around the following days:

September: 23, 28, 29
October: 5, 8-9, 12-16 (esp. 13 and 15), 19, 28-29
November: 1-2, 4-5, 9-11, 16, 19, 23, 25, 30
December: 1-2, 7, 11, 14-16, 21(Winter Solstice 12:47 PM EST)

Despite the physical impact the Sun, Moon and planets exert on our Earth, Barron’s is actually kinder than most in referring to planetary cycles as “alternative explanations” for the market’s behavior. The media may joke about Full Moons, Equinoxes, and Mercury retrograde, but Wall Street is watching, sometimes publicly but most of the time in the shadows.

*The other cardinal signs are Aries (Spring), Cancer (Summer), Capricorn (Winter).
**Fall 2009. Depending on the year, these dates can vary by a day or two.
***The other air signs are Gemini and Aquarius.

WallStreetWeather.net Forecast For Week Of September 21, 2009

2009-09-20T18:24:00.002-04:00

Summary Of Last Week’s Influences:
The stock market celebrated the one year anniversary of the week of Lehman Brothers collapse and the ensuing financial panic on Wall Street by closing at 2009 highs on Friday. So far Mercury retrograde has not reversed the market’s upward trend. Once again, the Fed’s ultra loose monetary policy is recreating asset price inflation in the stock market as investors chase yield in riskier investments.

Taking Q&A after giving a repeat of his Jackson Hole speech Tuesday, Fed Chairman Bernanke said the recession was “from a technical perspective very likely over at this point,” adding that employment will take longer to recover.

Bernanke’s comments came on the day Saturn opposed Uranus for the third time. Saturn reflects the government sponsored bull market that Uranus has taken from the unexpected multiyear lows of early March to levels higher than imagined. Despite encouraging signs of economic improvement, the stock market is priced for economic perfection which is just not possible when Wall Street and the consumer are living in parallel universes.

Uranus represents extremes, and just as the market was overdone on the downside, the market has went to the opposite extreme. If the bulls really stood behind their conviction, then why have long term out of the money Puts on the indices and most stocks gotten so pricy? These Puts were cheap a couple of years ago when the market was on its way to reaching record highs.

On the geopolitical front, Mercury retrograde challenging Pluto late last week brought a reversal of the Bush Administration’s plan to place 10 ballistic missile interceptors in Poland and radar in the Czech Republic. In the new plan existing weapons would be used, equipping the Navy’s ship-based missile defense system with Aegis radars and antimissile interceptors. These enhanced naval vessels would then be deployed to effectively intercept Iranian short and medium range missiles to protect Israel and other U.S. allies. The Pentagon will not only save millions of dollars, but having a ship-based defense system provides the portability that a fixed land based system does not.

Summary Of This Week’s Influences:
Venus (money/banking) moves into Virgo today until October 14. Venus together with Mercury in Virgo (until October 9) takes a critical look at valuations and financial arrangements such as the compensation practices at the nation’s largest banks. Venus in Virgo tends to be more risk averse than Venus in Leo (August 26-September 20).

Due to Mercury being retrograde, Mercury in Virgo will repeat its conjunction to Saturn early Tuesday morning and oppose Uranus Wednesday morning. Mercury conjoining Saturn tends to be a bearish influence as investors take a more cautious view. Mercury first conjoined Saturn on August 17 (indices closed down 2%+ that day), and will make its final conjunction to Saturn October 8.

Mercury opposing Uranus for the second time on Wednesday tends toward the opposite extreme. Mercury opposed Uranus on August 21, a day the indices made fresh 2009 highs. (Mercury will oppose Uranus for the third time at the October 4 Harvest Moon.)

Fall officially begins at 5:19 PM EDT Tuesday when the Sun enters Libra until October 23. With the New Moon in Virgo last Friday conjoining Mercury retrograde and Saturn so close to the time of the Autumnal Equinox, new action will be taken on established issues such as financial regulatory reform and healthcare. Both the House Financial Services Committee and the Senate Banking Committee will be holding hearings this week to address the Administration’s financial regulatory reform proposal, systemic risk issues, and an examination of TARP one year later.

The Sun in Venus-ruled Libra challenging Pluto in Capricorn Wednesday accentuates these themes, shining the light on the financial regulators themselves and their lack of changing the practices that got us into the crisis at the banks they regulate. Pluto represents what is kept hidden, and if the Federal Reserve was truly operating with greater transparency as Chairman Bernanke claims, why would the House be holding a hearing this week on H.R. 1207 The Federal Reserve Transparency Act of 2009 (S.604: The Federal Reserve Sunshine Act)?

The FOMC will conclude its two day meeting on monetary policy Wednesday while all of these planetary alignments are taking place. While the FOMC announcement always attracts attention, there could be something profound emanating from Wednesday’s announcement. It could reverse currency markets and affect foreign purchasers of Treasuries.

Pluto rules mortgages. As Saturn enters Libra October 29 and challenges Pluto (exact November 15), the Fed will have to contract the amount of mortgage securities it purchases confirming the scheduled wind down at year end.

The Sun represents leaders, and Libra represents diplomacy. Each year when the Sun enters Libra, the world’s leaders gather at the U.N. General Assembly. President Obama will be playing diplomatic host this week. On Tuesday the President will hold a joint meeting with Palestinian Authority President Abbas and Israeli PM Netanyahu to restart peace talks between the two sides.

The Sun challenging Pluto describes that peace talks between Israel and the West Bank Palestinians will likely be unsuccessful because of the missing parties from Gaza and Lebanon. It’s fruitless to pretend that those who are distasteful don’t get an equal seat at the negotiating table. Pluto rules nuclear issues, and on Wednesday when the alignment will be exact, President Obama will chair a summit-level meeting of the U.N. Security Council on a resolution on nuclear nonproliferation and disarmament.

Then at the end of the week the President will host the G20 in Pittsburgh. Even though financial overhaul measures to prevent global systemic risk as well as climate change is the focus of the agenda, most leaders seem primarily focused on bankers’ compensation.

With Mercury having shifted back into its home sign Virgo for the remainder of the retrograde cycle, market volatility could increase.

Monday, September 21, 2009
Negative.

Tuesday, September 22, 2009
Negative.

Wednesday, September 23, 2009
The Sun challenging Pluto could bring merger news today. The Sun/Pluto and Mercury opposite Uranus tends to be a positive influence, but this influence could weaken and reverse in the afternoon.

Thursday, September 24, 2009
Choppy/mixed to negative trend bias.

Friday, September 25, 2009
Negative, then choppy/mixed to improving conditions that could reverse in afternoon.

Judge Rejects Bank of America/SEC Settlement, Sets February 1 Trial

2009-09-14T23:10:00.002-04:00

Published by WallStreetWeather.net
On the day that Lehman Brothers filed for bankruptcy, Bank of America CEO Ken Lewis was sipping champagne with Merrill Lynch CEO John Thain to celebrate the announcement of the marriage of BofA and Merrill Lynch following their whirlwind weekend courtship.

Today a one year anniversary present was delivered from Judge Jed S. Rakoff who rejected the $33 million settlement BofA had agreed to pay the SEC for having “materially lied to its shareholders” by failing to disclose in the merger proxy filing that Merrill Lynch could pay up to $5.8 billion of the $50 billion merger in bonuses and year end compensation to Merrill executives prior to the January 1, 2009 merger. The judge has given BofA and the SEC until September 21 to file with the Court in preparation for a February 1, 2010 trial.

Throughout his Memorandum Order, Judge Rakoff reiterated that his primary reason for rejecting the settlement is that “the notion that Bank of America shareholders, having been lied to blatantly in connection with the multi-billion dollar purchase of a huge, nearly-bankrupt company, need to lose another $33 million of their money…is absurd.”

Unlike most government regulators, economists, and media pundits who believe shareholders should be punished for the bad decisions made by senior management, Judge Rakoff’s ruling shows he clearly understands shareholders are very rarely able to influence management’s decisions. How do shareholders ever really know for sure what the company’s true state of financial health is even if they read SEC documents and press releases and listen to conference calls that convey one thing, only to find out the information was not true? All the while the Federal Reserve and other government regulators remained silent.

Institutional investors (i.e. mutual funds) have the largest influence on corporate management who they will almost always side with in order to retain the company’s 401k plans and other business. Inflicting moral hazard by wiping out shareholders has hurt millions of individual investors while the executives of these failed companies walked away with millions.

In response to Judge Rakoff wanting to know why the SEC deviated from its normal policy “to go after the company executives who were responsible for the lie, rather than innocent shareholders,” the SEC said their investigation pointed to BofA and Merrill lawyers who drafted the shareholder proxy and made the disclosure decisions about paying the bonuses. Judge Rakoff then asked the SEC why they imposed penalties “on the victims of the lie, the shareholders” instead of the lawyers.

And get this: BofA “vigorously asserts that the proxy statement, when read carefully, is neither false nor misleading.” Why? Because the bonus schedule was not attached to the proxy statement! However, BofA stated to Judge Rakoff that even if the proxy was misleading, “the misstatements were immaterial because (it) was widely acknowledged in the period leading up to the shareholder vote that Merrill intended to pay year-end incentive compensation.” Even the SEC found that excuse “hollow” as relying on “media speculation” cannot be equated on the same level as a company’s SEC filings.

Judge Rakoff notes that although BofA provided “voluminous papers protesting its innocence, BofA never actually provides the Court with the particularized facts the Court requested, such as precisely how the proxy statement came to be prepared, exactly who made the relevant decisions as to what to include and not include so far as the Merrill bonuses were concerned, etc.”

Regarding the $33 million settlement, Judge Rakoff writes:
“But all of this is beside the point because, if the Bank is innocent of lying to its shareholders, why is it prepared to pay $33 million of its shareholders’ money as a penalty for lying to them?”

Judge Rakoff acknowledges that BofA’s decision to settle was probably a “business judgment,” but finds it “difficult to believe that litigating this simple case would cost anything like $33 million.” (Obviously BofA wanted to keep one of their regulators happy and get the issue out of the news ASAP!)

In a footnote, Judge Rakoff remarked: “Undoubtedly, the decision to spend this money was made even easier by the fact that the U.S. Government provided the Bank of America with a $40 billion or so ‘bail out,’ of which $20 billion came after the merger.” (Remember that BofA told Bernanke and Paulson the bank would walk away from the deal without government assistance to cover Merrill’s projected $20 billion loss.)

In addition to the $33 million fine, the SEC forbids BofA “from issuing false or misleading statements in the future.” Since when should companies EVER lie or conceal information from shareholders?!

Judge Rakoff concludes that “the SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the Bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth.”

BofA claims they’re ready to litigate, and Judge Rakoff doubts the SEC will drop the charges against BofA. Additionally, various newswires are quoting the Associated Press that New York AG Andrew Cuomo is preparing a belated anniversary gift of civil charges against some of the highest ranking BofA executives. And the House Oversight Committee has not finished its investigation into the secret deal reached between Ken Lewis, Bernanke, and Hank Paulson to ensure the merger took place as planned.

To quote Judge Rakoff, “the truth may still emerge.” Saturn represents the law of cause and effect. On October 29, Saturn will move into Libra, the sign represented by the scales of justice. Saturn will then form a tense alignment to Pluto in Saturn-ruled Capricorn, exposing all kinds of secret arrangements between the government and corporations. The energies of Saturn/Pluto will seek to bring what is unfair, unjust, and out of balance back into equilibrium through digging deep to get to the root cause of the imbalance. As Saturn represents government and Pluto represents people in positions of power, government officials can come under just as much scrutiny as corporate leaders.

Banks will particularly come under scrutiny as Libra is ruled by Venus (banks). At the same time, Saturn and Pluto will form challenging alignments to the USA natal Venus and Jupiter, reflecting that these events could have a big impact on the financial system. The second Saturn/Pluto alignment will exactly occur at the time Judge Rakoff has scheduled the trial. Ken Lewis was already stripped of his BofA Chairmanship in April, and he has seen that both the Bush and Obama Administrations have no compunction removing CEOs. And as I have previously written, Saturn, Pluto and other planetary transits will bring new scrutiny to the Federal Reserve. Bernanke might begin to wish he had not been reappointed.

To quote a favorite expression of Oprah Winfrey, “what I know for sure” is that our judicial system could certainly use more common sense and shareholder friendly judges like Judge Jed S. Rakoff.

WallStreetWeather.net Forecast For Week Of September 14, 2009

2009-09-13T18:22:00.002-04:00

Summary Of Last Week’s Influences:
Mercury represents trading one currency for another. Since Mercury turned retrograde, the value of the U.S. dollar to the world’s major currencies has declined to new lows for the year. On Friday the dollar index (DXY) hit a 52 week low, and made a new 2009 low against the euro. As Mercury stationed retrograde, the Chinese government expanded its plans to internationalize the renminbi, and a report by the U.N. Conference on Trade and Development said the dollar’s role as the world’s reserve currency should be reduced.

The stock market’s continued upward trajectory also weighed on the dollar, as the Fed and other government officials continue to reiterate fiscal stimulus won’t be reversed anytime soon. On the six month anniversary of the indices hitting multiyear lows on March 9, the S&P 500 has risen over 50%. (1933 was the only time in a six month period the S&P has exceeded that rapid gain.) One day before the 9/11 attacks, the Dow closed at 9,605.51; on Friday the Dow closed at 9.605.41.

Mercury turning retrograde Monday brought the return of news about takeover speculation after Kraft’s (KFT) attempt to buy Cadbury for $16.7B was rejected by the confectionary company. Pluto rules M&A activities, and its energies were also pronounced as Pluto turned direct September 11. Any company that makes a never before fresh offer to acquire another company during Mercury retrograde will probably end up regretting it, but Wall Street banks only care about rejuvenating the dealmaking to collect those fat fees.

In last week’s Forecast I wrote about gold’s rapid rise since Venus entered Leo (August 26-September 20). As the mythological lord of the underworld, Pluto rules the wealth extracted from under the Earth.* When planets appear from Earth’s vantage point to be stationary, their energies are more pronounced. Pluto was stationary all week, and (Sep.) gold reached a new record close of $1,004.90 an ounce Friday when Pluto turned direct.

Dollar weakness is increasing the price of gold as investors use gold as a hedge against overly accommodative monetary policies. Another reason for gold’s rise at this time is that gold is experiencing its Saturn return from its all time record high of $850.00 on January 21, 1980. (On October 2, Saturn in Virgo will be exactly where it was when gold reached its record high.) Back in 1980 gold was being bought as a hedge against record high inflation, as Saturn (fear) was challenging Neptune (inflation) in fiery Sagittarius. Neptune in fire signs tends to elevate inflation, and in Jupiter-ruled Sagittarius, inflation rapidly expands.

While I foresee inflation coming sooner than most of Wall Street expects, the above explanation describes why I do not foresee inflation rising to match the levels of the 1970s-early 1980s. And it is for this reason that I do not believe gold will break its 1980 record. Because in inflation-adjusted terms, gold’s real record high in 1980 was $2,284.99. Gold bugs tout that gold has never gone down to zero, but it’s no inflation hedge either. (And the potential for loss is only slightly above Lehman Brothers.)

Of course there are those investors who feel better owning gold during times of instability. Pluto turning direct together with Mercury retrograde reinforced the old tensions between the U.S. and Russia, Iran, and North Korea. Pluto rules nuclear issues, and Russia is not cooperating with the West on imposing further sanctions against Iran who like North Korea, has made it clear it will continue to enrich uranium.

Pluto represents covert activities, and yesterday the Israeli Intelligence Affairs minister admitted Prime Minister Netanyahu was not “on tour” at an Israeli security installation as had been reported, but instead made a secret visit to Moscow on Monday. The Russian newspaper Kommersant speculated the trip’s purpose could relate to the possibility of Israel planning to attack Iran. The Middle East does appear to have the potential to be a major hot spot for the three months beginning with the September 22 Autumnal Equinox.

Related Pluto Post: “Fed Pushes Banks To Buy Ginnie Maes To Create Illusion Of Healthier Balance Sheets”

Summary Of This Week’s Influences:
We have arrived at the one year anniversary of the week that saw the collapse of Lehman Brothers, the marriage of Merrill Lynch to Bank of America, the 79.9% government solution for AIG, and the panic that spread to the doorsteps of Morgan Stanley and Goldman Sachs.

President Obama and Fed Chairman Bernanke are scheduled to give speeches commenting on the first anniversary of Lehman’s collapse. Bernanke will probably use the opportunity to repeat how he was impotent to help because Lehman’s problems were beyond the powers of the Fed, despite Section 13.3. With Mercury retrograde, Bernanke will likely also repeat his claim he saved the world from “Depression 2.0.” But other than the fact that there is less competition on Wall Street, what has fundamentally changed? The Bush Administration’s policy of demanding moral hazard has created banks that are even bigger than those previously deemed too big to fail. Government welfare programs have helped to put many of the banks on course for record profits and executive compensation this year while consumers are hit with fewer banking choices, higher fees and higher consumer interest rates despite the central bank’s monetary policy.

As Gretchen Morgenson points out in her column today, “awarding increased power to those who failed in their oversight duties flies in the face of all notions of accountability.” Except for Hank Paulson and Christopher Cox, all the major financial regulators are still running the show now (and Bernanke has been renominated). Or as Morgenson writes: “Imagine hiring Angelo R. Mozilo, the former chief of Countrywide Financial, to run a global financial institution.” Federal Reserve officials had taken up residence at Lehman’s headquarters since Bear Stearns collapsed in March, but they did nothing and allowed Dick Fuld and the other top executives to project a positive scenario to shareholders up to the very end.

Saturn represents life’s lessons, and during Saturn in Virgo the lesson is about accountability. Tuesday marks the third time that Saturn opposes Uranus in Pisces. Uranus represents surprises and shocks to the system that serve as a wakeup call to change what has become inefficient (Saturn in Virgo).

The first Saturn/Uranus opposition occurred on Election Day and was quite literal as Saturn represents the establishment and elderly persons, and Uranus represents “change” and the younger generation. Oppositions are like a seesaw that tilts too far to one direction; what’s needed is to balance the positive energies of both planets. The February 5 opposition was skewed towards Saturn’s end as the market feared what was lurking on banks’ books would not pass the stress test, forcing the government to nationalize the banks. Within one month of these oppositions, the stock market hit new lows but then Uranus, aided by giant Jupiter and bubble blowing Neptune in Aquarius (the sign ruled by Uranus), tilted the seesaw in the other extreme.

The indices reached new 2009 closing highs Thursday and intraday highs Friday. Although the stock market has remained turbulent free so far, it is only a matter of time (Saturn). The easy money riding up on future projections (Uranus) has been made. Saturn represents fundamentals, and Saturn in Virgo can get pretty nitpicky. Without fundamental support, the stock market has limits (imposed by Saturn’s infamous rings) as to how much higher it can go.

Past performance (Saturn) does not indicate future projections (Uranus), and Mercury retrograde could alter the opposition’s previous patterns of market behavior. However, as Saturn approaches a challenging alignment to Pluto (exact November 15), more previously undisclosed information will likely surface regarding the actions taken by government officials during the financial crisis. And Congress will likely pass some type of financial regulatory reform.

October 15 marks the midpoint of the Saturn/Uranus opposition and Saturn challenging Pluto. Mars (action) reaches the degree of the July 21 Solar Eclipse that day. The eclipse conjoined the Federal Reserve’s natal Neptune and opposed the USA’s natal Pluto. As Pluto represents the extremes of massive wealth and massive debt and bankruptcy, some more financial lessons could be in store as part of the planetary curriculum.

Unlike the prior two Saturn/Uranus oppositions, the Sun (Thursday) and Friday’s Virgo New Moon intensify these energies. The Virgo New Moon raises new questions and brings evaluations of old issues. Virgo is ruled by Mercury which retrogrades back into Virgo late Thursday until October 9. (Mercury was previously in Virgo August 2-25). Prior to Mercury’s shift Thursday, Mercury in Libra will once again challenge Pluto (previous time was August 26). Secret information could be revealed, potential for currency and other types of market manipulation, and potential geopolitical sabre-rattling.

To top things off this week, Venus (money/banks) in Leo (stock market) will oppose Neptune (euphoria/panic) in Uranus-ruled Aquarius (unexpectedly sharp and sudden moves). Adding to the potential volatility and choppy trading will be Friday’s quadruple options expiration that can create added volatility a couple days beforehand.

Monday, September 14, 2009
Negative.

Tuesday, September 15, 2009
The stock market closed sharply up on the prior two oppositions of Saturn and Uranus (11/4/08 and 2/5/09), but today could find the indices choppy/mixed, swinging in both directions. If the market turns out to be bullishly up as in the past, it could likely start to lose momentum or even reverse into the close.

Wednesday, September 16, 2009
Negative.

Thursday, September 17, 2009
Up early, then becomes choppy/mixed to negative.

Friday, September 18, 2009
Choppy/mixed to positive trend bias.

*However, oil is more closely related to Neptune, the ruler of chemicals and liquids that form bubbles.