Review and Preview

 Did you see that?

The Federal Reserve Board’s decision last Tuesday to resume buying U.S. Treasuries (but not mortgage backed securities) instead of drawing down its post-2007 triple-sized bloated balance sheet, is at least the third major development that has occurred within the midsection of the Cardinal Climax, July 21-August 21. The other two include passage of the “Financial Regulatory Reform Act” on July 21 and the extremely dry and hot drought conditions that have caused deadly fires in Russia, and led to a huge run up in Wheat prices around the world.

Many world equity markets fell fairly hard last week, following the series of intermarket bearish divergence signals in all regions of the world between June 21 and the highs that have occurred within the central time band of this Cardinal Climax. In Europe, the AEX of Netherlands attained a recent high of 341 on August 4, which was below its high of 343.32 recorded on June 21. The SMI of Switzerland also made a lower high on August 6 at 6409 than its previous cycle high of 6531 on June 21. But this not the case in the German DAX and London FTSE, which both exceeded their highs of June 21. The DAX made a new yearly high at 6386 on August 6, and the FTSE made a new cycle high of 5418 on August 9. Each of these indices then fell sharply into weekly lows on Thursday or Friday.

In Asia and the Pacific Rim, intermarket bearish divergence was also evident on the recent highs into the heart of the Cardinal Climax. The 9750-9760 highs of July 28 and August 3 in the Japanese Nikkei Index were far below its 10,251 high of June 21. Australia’s All Ordinaries got to 4618 on August 9, but that was slightly under the prior cycle high of 4631 on June 21. But the Hang Seng or Hang Kong, NIFTY of India, and MICEX of Moscow all make new cycle highs in this Cardinal Climax midsection before tumbling down into the end of last week.

In the Americas, the Bovespa of Brazil and Merval index of Argentina made new cycle highs on August 9, along with the Dow Jones Industrial Average. They all exceeded their prior cycle highs of June 21. However this did not occur in the NASDAQ Composite Index, which could only get up to 2309 on August 9, well below its 2341 high of June 21. When you have so many cases of intermarket bearish divergence in a critical reversal zone, where one index in a region makes a new cycle high and others do not, it is oftentimes followed with a sharp decline. In many cases, it will indicate a primary cycle crest is in. If that is the case now, the market could be under pressure into the mid-term elections, or Venus changing to its retrograde direction (October 8). The last Venus retrograde took place on March 6, 2009, the low of the “Panic Crisis” bear market. Every 8 years it retrogrades in approximately the same degree of the zodiac. In this case that will be in Scorpio. The Venus retrograde of 8 years ago was on October 10, 2002. Other stock indices made a slightly lower 4-year cycle in March  around the world following President Bush’s decision to invade and overthrow the regime of Saddam Hussein in Iraq.

 Equities were not the only financial markets to make noteworthy moves last week. The most important development was in the U.S. Treasury markets, which blasted upwards following the Fed’s decision to resume purchase of these very long-term debt obligations of the U.S. Government. We said there could be a bubble, and if it happened in Treasures, it would result in “Double Bubble Trouble.” Indeed, that seems to be happening now as Treasuries approach the levels present in the height of the 2008 Panic. The Fed’s decision makes one wonder if things are progressing so badly that there is real danger of another economic and market collapse. Why would they take Treasuries back to the level of the 2008 crisis days if the economy was improving and stabilizing as the White House and its “Economic Dream Team” continues to insist? Somebody is not telling the whole story to the American people and the world. Don’t take my word for it. Take the word of the San Francisco Federal Reserve Bank report issued last week, stating that “… the probability that the U.S. economy will slip back into recession over the next two years is higher than that of economic expansion.” (CNBC.com, August 10).

Short-Term Geocosmics

Another powerful line up of geocosmic signatures is set to engage this week, which is all part of the July 21-August 21 midsection of this tremendous celestial pattern known as the Cardinal Climax (2008-2015). The good news is that we will begin to exit the deepest part of the cosmic abyss. The not-so-good-news is that some of the decisions that have been made and policies that have been enacted in the past three weeks may lead to prolonged economic difficulties and perhaps bear markets in several financial markets. That, by the way, is an opinion of mine and not a given fact. I could be wrong, because we are in uncharted waters, and no one knows for certain what the consequences will be. But over the next few weeks (and in Forecast 2011) I will explain my reasoning within the context of historical instances of such geocosmic signatures and their correlation to the outcome similar economic and political themes.

We have much to look forward to this coming week in terms of geocosmic activity that will complete this phase – the fifth and deepest layer - of the Cardinal Climax. On Friday, August 13, Uranus moves back into Pisces from Aries. It will return to Aries for seven years after March 4, 2011. In the meantime, it may suggest going back and redoing parts of the Health Care Reform Act (Pisces rules health care, and Uranus represents changes). Perhaps Congress will consider removing the onerous non-health care mandate within that bill of hiring thousands of new IRS agents with the task of siphoning through massive amounts of new government reporting requirements for quarterly business expenditures exceeding $600. What does hiring more IRS agents have to do with health care reform, if the cost is not a tax?

On Monday, August 16, Jupiter will form its second of three oppositions to Saturn. This is a 20-year planetary cycle that has a fairly reliable correlation to long-term market cycles, and oftentimes coincides with 4-year cycles. You may remember the last opposition between these two planets was in 1990, which also coincided with a recession and a modest bear market in stocks. It also correlated with a hefty tax increase by President George H. Bush (father of ‘W’).

At the end of this week (August 20-21), the current phase of the Cardinal Climax will end with Venus will conjunct Mars in Libra (Venus rules Libra, Mars is in detriment in Libra), the Sun will be in opposition to Neptune (a very powerful Level 1 reversal signature), Mercury will commence its three-week retrograde motion through September 12, and Saturn will end its 32-37 year waning square to Pluto cycle. As stated last week, “Then we might be able to look back and realize the importance of what just happened. Or maybe we will even need to wait until Mercury retrograde ends before we begin to understand it all.”

Longer-Term Thoughts

 Laying on the ground up here late into the night, in the back woods and on the ancient inland waterways of Northern Michigan, watching the awesome shooting stars of the Perseid meteor showers, it came to me in a flash. The Cardinal Climax is all about a shift in power, a shift in the balance of power in all aspects of world finance and politics. Think of it as the decisions that will lead to shift in power between banks, business, and the government and its new army of regulators, not to mention the people (who are they in this new world that is being crafted?). A shift in the value of currencies, and hence rearrangement of economic strength of nations, may be a natural result of what is transpiring in the heat of the Cardinal Climax. In my opinion, this powerful time band is indeed living up to its hype. Money will soon be valued differently, led by different nations and different standards than are used today. An era is coming to an end.

 This cause for this shift in power is related to the explosion of debt in the world, and how various countries are dealing completely differently with it. “The economy is looking brighter in Britain and Germany after these governments announced plans to reduce spending,” according to an article in Thursday’s Wall Street Journal by Professor Allen Metzner, titled, “Europe Jumps of the Keynesian Bus.” But what did the United States do?

Last week the United States and its Central Bank, the Federal Reserve Board, had a choice regarding economic policy. They could take Britain and Germany’s path of “Chic Austerity,” denoted by Saturn in Libra as it forms a T-square to the Sun-Pluto opposition of the FRB chart (December 23, 6:02 PM, Washington, DC, source: New York Times via Matt Carnicelli of the ISAR Financial Yahoo groups). Or they could continue the “Keynesian Bus” path of Jupiter-Uranus conjunction in early Aries, (“Chic Stimulus”), which is in T-square also (from the other side) to the Fed Sun-Pluto opposition. This path will encourage greater spending and debt with the hope (again) that this time it will really result in reducing the national deficit. Go figure how spending more money has - or will - reduce the deficit in this phase of the economic cycle.

If the Fed and Government want to be truly serious about getting people back to work, why not take Mark Leibovit’s idea (www.VRTrader.com) and make those 0-.25% loans available to credit-worthy businesses who really need the money and can hire people to make the economy grow again, rather than solely to “banksters” that are members of the Fed and hoard the money? Do you know anyone who can really borrow money at the much publicized rate of 0- .25%? Do you know any banks that will lend that money - that is only available to them at this rate – for anything less than 8%? If they lend it at all? For why should they take the risk of loaning it out at even 8% to credit worthy businesses, when they can simply turn around and buy 4% U.S. Treasuries with absolutely no risk and at the guarantee of the U.S. Government? Or are they missing something? I don’t know what it is, but I think they are missing something. When Jupiter and Uranus square your Sun (as it is doing in the Fed chart) you tend to over-estimate and make decisions that could lead to losses. When it squares your Pluto (as it is doing in the Fed chart), there is a tendency to increase your debt when you should be paring down your liabilities.

I am not sure what the results will be from these decisions of the past three weeks, and especially last Tuesday. But as a Financial Astrologer, it seems clear that this government and this central bank are still following the ghost of John Maynard Keynes, and going the route of Jupiter and Uranus in Aries. They are pushing the pedal to the metal as they rev up the depleted engine of a deteriorating economy for one last run. As Wednesday’s Wall Street Journal writes (taking a lead from our columns of the last few weeks perhaps), “Yesterday the Fed decided it won’t shrink its balance sheet, which would have resulted in monetary policy moving from 200 miles per hour to 190 or so. Instead the Fed will stay at full throttle, reinvesting the proceeds from expiring mortgage-backed securities on its balance sheet into direct purchases of long-term treasury securities.” They are not even going to continue supporting the weakest part of the economy, the housing sector. They are supporting banks (themselves included). But it’s getting dark outside and the lights on this race car of monetary policy are about to go out. It’s another "double or nothing" gamble and it may very well indeed lead Treasuries into “Double Bubble Trouble.” It is only a matter of time before we hear, “What the ____ do I do now?”