(12 November 2023) US stocks extended their rebound last week as mixed signals from Fed speakers proved sufficient to spark a tech-led rally. The S&P 500 added more than 1% on the week to 4415 while the Nasdaq-100 gained almost 3% to 15,529. This bullish outcome was quite unexpected as I thought we might have seen downside from the Saturn alignments with Venus and Mercury. While Thursday was lower, Friday’s short squeeze resumed the melt up.
Despite the mixed messages from the Fed, markets are still very much in rally mode. On Thursday, stocks pulled back as Fed Chair Powell suggested that the Fed may have to raise rates in order to bring inflation down to its 2% target. And yet on Friday, the more dovish member Raphael Bostic reassured markets that the Fed could reach its 2% without having to raise rates any further. Certainly, the FedWatch tool suggests that most participants are skeptical about the prospects of any further hikes. Last week’s bullish price action would seem to confirm the equity market’s belief that the Fed has paused. And yet, as usual, the bond market may require more convincing as the 10-year yield ended the week higher at 4.61%. Thursday’s auction of 30-year Treasuries went badly as buyers demanded higher premiums to compensate for rising inflation expectations. And Moody’s downgrade of US debt from stable to negative offered more evidence of the fiscal troubles of the US government as borrowing continues to expand even given the high borrowing costs. The Moody’s downgrade will focus attention even more closely on Tuesday’s CPI report as any upside surprise above consensus (4.1%) would be bad news for stocks. Persistent inflation is bearish for stocks, but inflation against a backdrop of deteriorating fiscal conditions could be even more bearish.
The planetary outlook remains bearish for the month of November. While last week’s gain was unexpected, there are still some significant bearish influences to consider. The Venus transit through sidereal Virgo (Nov 3-29) is usually marked by at least a 3-7% pullback at some point in the transit. And Saturn is due to form slow-moving alignments with Uranus (Nov 20) and Chiron (Nov 25) before the end of the month which should coincide with at least some selling. In addition, Saturn forms faster-moving alignments with the Sun (Nov 23) and Mars (Nov 23) that also should give the edge to the bears, probably in the second half of the month…
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Photo Credit: Tim Evanson
