Merriman Market Analyst

Review and Preview

 The Federal Reserve lowered its FED funds rate by a quarter percentage point on Halloween, October 31, as Neptune turned stationary direct. In response, the U.S. stock market soared to its highest level in two weeks, and other indices around the world also rose substantially. That was the “treat.” But by the next day, investors saw it totally differently as Mercury then changed directions, and the Dow Jones Industrial Average fell a whopping 362 points. That was the “trick” of Halloween. The official FED comments after the interest rate reduction said that this may be the last rate cut for awhile, as they are worried about inflationary pressures. This warning also worried investors suddenly.

 But this complete flip-flop from bullish on Wednesday to bearish on Thursday also demonstrates the usefulness of Financial Astrology. Last week’s column stated, “But the retrograde and direct shifting of planets is indicative of surprises in mundane events as well as economic data reports. For instance, in this coming week, Neptune turns direct on Wednesday (October 31) and Mercury follows with the same pattern the next day, November 1. Since Mercury relates to mental processes and the disbursement of information (like news), and Neptune’s nature is to hide, retreat, or camouflage, we might anticipate a lot of misinformation to be released. It can be a very confusing time for investors.” The misinformation, or misleading part of last week’s announcement, may be the FED’s claim to be concerned about inflation, and that this might be the last interest rate cut for awhile. Don’t bet on it. This Federal Reserve team has talked about the threat of inflation ever since it assumed its term. Yet it hasn’t done one thing about it. Every action by this FED has added to the inflationary prospect, and no action to date has indicated it has done– or will do - anything to seriously address that growing threat, even as Crude Oil now approaches our $100.00/barrel target given two years ago, and as Gold climbs back above $800.00/ounce for only the second time in history (the last was in early 1980).

 In addition to the soaring prices in Crude Oil and Gold, the Dollar continues to fall to record lows against the Euro currency, and multi-decade lows against the Canadian and Australian Dollar. This too is inflationary, especially in the United States, but supports our premise given several years ago that currencies of commodity driven economies (like Australia and Canada) would fare well under the waning phase of the Saturn-Pluto cycle (2001-2020). Many of the equity indexes of the world performed quite well into – and shortly after – the FED fund rate cut. But then they all fell rather hard the next day as the week drew to a close. Have the markets now reversed to begin a new trend? I doubt it just yet. I think many financial markets will be very choppy the next six weeks, as signified by these stationary changes of direction through most of November, but also because Jupiter is coming to its 13-year conjunction with Pluto on December 11. I do believe there will be a change of trend during this period, but I think we are still in the rocky segment first, when it movers sharply in both directions.

Short-Term Geocosmics

 The time band continues to be in effect of so many important geocosmic signatures to one another between October 25 and November 30. Near the middle of this cluster, Mars will turn retrograde on November 14, something it does every 25-26 months. As stated last issue, “Not only that, but it occurs at 12 degrees of Cancer, right near the natal Sun of George W. Bush and the United States. Mars, as long-time readers know, is the planet of war and aggression. But when it is activated near a retrograde phase, it can lead to serious and unexpected problems for the aggressor. It is usually a very critical error in judgment to initiate aggressive and/or military activities around this time. And yet the ‘urge” to do so is great, for certain parties feel their warnings have been ignored, and thus frustration can grow to untenable levels, leading to ill-advised and even regrettable actions.” But Mars retrograde can also have a powerful impact on some financial markets. We note that the all-time speculative high of $850.00/ounce in Gold occurred in mid-January 1980, just a couple of days past a Mars retrograde. Interesting enough, Saturn was in Virgo then too, a position it occupies for about two years in its 29-year orbit around the Sun. Saturn just ingressed into Virgo in early September 2007, where it will remain through fall of 2009. And interesting also is that Gold is back above $800 for the first time since then. Same planets, same signs (for Saturn), same Gold prices. How is that for synchronicity?

 This week also contains two Level 1 signatures - those that have the highest correlation to primary or greater cycles in U.S. stock markets, as demonstrated in “The Ultimate Book on Stock Market Timing, Volume 3: Geocosmic Correlations to Trading Cycles.” On Tuesday, November 6, Venus will form a waning square to Pluto, which has a whopping 81% correlation to primary cycles within 12 trading days. This signature can also correlate with more bad news about sub-prime debts. The next day the Sun forms a waning trine to Uranus, which has a very high 74% correlation to primary cycles within a range of 11 trading days.

 The next day is also important (November 8), for Venus begins its 27-day ingress through Libra. Since Venus rules Libra and has pertinence to all things involving wealth (like stocks), one might anticipate this being bullish for equities. It also has a strong correlation to a low in Silver prices. But with Jupiter’s conjunction to Pluto looming ahead on December 11, it will be interesting to see if those historical Venus-in-Libra correlations will hold this time.

Longer-Term Thoughts

 The last time Jupiter and Pluto formed a conjunction was December 2, 1994. Readers may remember that as the time when Orange County, California, defaulted on its municipal bond obligation. Today we find many municipalities may be in financial trouble, brought on by the problems with sub-prime mortgage lenders, leading to many home foreclosures. Without property taxes coming in from those newly foreclosed homes, one wonders what impact that will have on the bonds of many municipalities as we draw to an end in 2007?

 Shortly after the Jupiter-Pluto conjunction, Jupiter ingresses into Capricorn for 13 months. It will almost immediately conjunct the Federal Reserve Board Sun at 1 degree of Capricorn (founded December 23, 1913). When Jupiter forms a harmonious aspect to the FRB chart, the FED is usually accommodative with its interest rate and money supply policies. I can’t believe it can be any more accommodative with money supply than it has been, with the no-longer-released M3 money supply figures growing at an estimated annual rate of 15% now. But if the sub-prime debt crisis continues to escalate, and if municipalities do declare a state of emergency in order to meet their own debt obligations, it is understandable how the Fed could be more accommodative. For despite its insistence that it really cares about inflation – an insistence given again last week as both Mercury and Neptune changed directions (a signature of “misinformation”) – the Bernanke-led Federal Reserve and Paulsen-led U.S. Treasury will do whatever is necessary to prevent an economic or market crisis. Do you really think our fire-sign heroes will actually raise rates and put a damper on the good times? Do you really think Bernanke the Sagittarian (or Paulsen the Aries) will really act restrictive in regards to monetary policy, even to curb inflation? These are fire signs, not earth signs! And Jupiter rules Sagittarius, is still in Sagittarius its home, and will soon conjunct the FRB natal Sun in Capricorn. I don’t think we are going to see higher rates this year. To the contrary, I think we will see lower rates yet. And another crisis in the sub-prime mortgage area, combined with a possible crisis in the municipal bond market, could be just the ticket needed to do what financial astrology implies the FED and Treasury will do – lower interest rates and inject more liquidity into the system. Or in other words, continue with its inflationary actions.