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Week Beginning October 19, 2009

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Raymond Merriman  The Dow Jones Industrial Average broke the 10,000 mark last Wednesday for the first time since the Great Panic of 2008. In fact it reached a new yearly high of 10,062 on Thursday and Friday before closing the week back under 10,000. Was that it? Possibly. After all, the high coincided with the two important “translations” at the end of last week. As stated before, “Of most importance, however, may be the translation of Venus to the Saturn-Uranus-Pluto T-square of October 9-15. But then a closer look at that period will reveal that the Sun will trine the Jupiter-Neptune conjunction October 10-16, while Jupiter ends its retrograde motion and goes stationary direct date on October 12.”

The DJIA wasn’t the only stock index to make a new yearly high late last week. In fact, all the equity indices we track made new yearly highs at the end of last week, except the Japanese Nikkei. Other markets also performed well. Gold made a new all-time high on Wednesday, while Silver and currencies (against the U.S. Dollar) made yearly highs the same day. Crude Oil soared past its yearly high of 75.00, reaching 78.67 on Friday. The grain markets also did very well. The only financial markets that we follow that didn’t do well were the U.S. Dollar (see Longer-Term Thoughts) and Treasuries.

So as we look back, we can observe that the third passage of the Saturn-Uranus opposition did correspond with a top, but not of a primary cycle degree. In the first two passages, the DJIA fell close to 2000 points over the subsequent 3-4 weeks. But in this third passage, the decline was only slightly less than 500 points, and it lasted all of 7 trading days. It is interesting to note that in this new century, every third year has failed to produce the dreaded “October surprise” to the downside, despite the presence of some rather serious geocosmic signatures that suggested it would. In each case so far, the rally continued into February before a significant decline commenced into March.

Short-Term Geocosmics

This week is important from a lunar cycle standpoint. First of all, this Saturday (October 17) will witness a new moon in Libra, which oftentimes does correspond to a high prior to a substantial decline. Yet on Tuesday, Mercury will form a trine to Jupiter, followed by the Moon in Sagittarius on Wednesday and Thursday. When markets are rising, these factors can also correspond to a peak, for Jupiter and Sagittarius represent the principle of optimism, particularly with Venus in Libra. With earning reports still coming out, there can be more “good news” under these combinations.

Longer-Term Thoughts

“You know that line in Fletch when Chevy Chase tells a doctor that it was shame that ‘Ed’ died so suddenly. ‘He was in intensive care for eight weeks,’ the doctor says. To which Chevy Chase replies: ‘But in the very end, where he actually died… that was extremely sudden.’” – Fed governor Kevin Warsh, as quoted by David Wessel in the book, “In FED We Trust.”

It’s a problem nobody in Washington DC or Wall Street wants to talk about. And it relates to our current subject of Pluto in Capricorn and the Economy. Specifically, it is a direct result of the falling value of the U.S. Dollar, the historically low interest rates, and the devastating effect it is having upon savers who planned upon interest income to survive in their golden years.

Transiting Pluto has been crossing back and forth in opposition to the U.S.A. natal Venus at 0 Cancer since January 2008, using the July 2, 1776 date for the Declaration of Independence. It is stationary at 0 Cancer from August through October 2009. Venus rules a country’s currency, and Pluto in opposition represents a threat to its value, even its survival. One of the hot topics taking place in financial forums (and financial ministries) all over the world today is the stability of the U.S. Dollar. Its status as the standard world currency is coming under increasing scrutiny, and there are many who believe it will lose that status in the not-too-distant future. Following the opposition to Venus, transiting Pluto will then move into opposition to the USA Jupiter. As discussed before, transiting Pluto, Neptune, or Uranus in hard aspect to an entity’s natal Venus or Jupiter is a classical bankruptcy aspect. It doesn’t mean you will go bankrupt, but if you enlarge debt and/or increase the risk of your financial exposure, the probabilities are high that you will.

One of the reasons for this prolonged decline in the U.S. Dollar has been the interest rate policy of the Federal Reserve Board, which has set its benchmark Fed funds rate at 0-.25% for almost one year now. According the Fed’s recent statements, there are no plans to raise it in the immediate future, which means there may be no plan to support the Dollar. But there are other consequences upon the economy. As long as rates remain this low, it creates great financial pain to retired people and others who depend upon interest from savings to survive. With the basic interest rate now being paid on bank savings and money market accounts at about .1% annualized, savers are in effect being penalized. Not only that, they are being forced to seek higher returns through speculation in stocks and other financial vehicles which may not be suitable to their age or situation. And not only that, but without the income derived from savings, there will be less spending by a large segment of the population. They can’t afford to spend as they were accustomed to doing. This ultimately hurts retail businesses too. No gifts this Christmas from the grandparents.

Consider a few years ago when interest on money markets was paying about 5%. On a $500,000 savings account, that would yield about $25,000/year. Added to social security payments, a retiree could get by fairly well. But at .1%-.3% return, the annual income from interest is drastically reduced to only $500-1500/year. The retiree has at least four choices, all unattractive: 1) move to long-term bonds, which yielded close to 4% now, but are subject to changes in principle until their term expires, and are not as liquid, 2) move to stocks or other investment vehicles, where the principle may fluctuate wildly and therefore negate the “safety” feature they need, 3) try to go back to work, in an environment where work is hard to find, 4) start spending from the principle, with the prospect of eventually running out of savings.

I am oftentimes asked by clients, “Where can I put my capital today that’s safe and will earn money?” The answer is – sadly – nowhere. If you are a conservative saver, seeking to protect your capital, you are being forced to accept almost no return for your “good saving’s habit,” or to become a speculator in search for higher returns with the probability of developing some bad financial habits that puts at risk all the money you have carefully worked so hard to save. In short, this devaluation of the Dollar through the lowering of interest rates to today’s historic lows is also the creation of a “disaster waiting to happen.” And when it hits, with an army of baby boomers entering retirement over the next decade, it could be exactly like Chevy Chase said: ‘But in the very end, where he (the Dollar and the economy) actually died… that was extremely sudden.’”

This is just another of the many challenges facing the government, investors, and the common man as Pluto grinds its way through Capricorn over the next 15 years. It is consistent with the waning phase of the Saturn-Pluto cycle (2001-2020), where one must resist the temptation to sacrifice the safety of one’s capital for the dream of higher returns through unwise speculation. A peak in this dynamic is likely in the next year when Saturn reaches the midpoint of that waning phase, as it forms a waning square to Pluto (November 15, 2009-August 21, 2010). It will also pose a major ethical and image problem for investment banks and brokerage firms who just announced they will pay out record bonuses this year to their executives, just one year after the greatest banking crisis in the last 80 years required huge sums of taxpayers’ money to bail them out. That’s the thing about cycles involving Pluto: if you repeat the behavior that created problems, expecting different results, you are going to take some heat. A lot of heat. Big business and banks are apt to find that the disdain and distrust the public is forming about them is growing. Being insensitive to the financially struggling community that supports them is not a good sign for their future, especially with Pluto in Capricorn.

Next week we will start on Neptune’s role in today’s social and economic situation, which will tie into this issue even more deeply.

© Raymond A. Merriman


Disclaimer and statement of purpose: The purpose of this column is not to predict the future movement of various financial markets. However, that is the purpose of the MMA (Merriman Market Analyst) subscription services. This column is not a subscription service. It is a free service, except in those cases where a fee may be assessed to cover the cost of translating this column from English into a non-English language. This weekly report is written with the intent to educate the reader on the relationship between astrological factors and collective human activities as they are happening. In this regard, this report will oftentimes report what happened in various stock and financial markets throughout the world in the past week, and discuss that movement in light of the geocosmic signatures that were in effect. It will then identify the geocosmic factors that will be in effect in the next week, or even month, or even years, and the author’s understanding of how these signatures will likely affect human activity in the times to come. The author (Merriman) will do this from a perspective of a cycle’s analyst looking at the military, political, economic, and even financial markets of the world. It is possible that some forecasts will be made based on these factors. However, the primary goal is to both educate and alert the reader as to the psychological climate we are in, from an astrological perspective. The hope is that it will help the reader understand these psychological dynamics that underlie (or coincide with) the news events and hence financial markets of the day.

No guarantee as to the accuracy of this report is being made here. Any decisions in financial markets are solely the responsibility of the reader, and neither the author nor the publishers assume any responsibility at all for those individual decisions. Reader should understand that futures and options trading are considered high risk.