(18 January 2016) Financial markets continue to look shaky as the ‘China Syndrome’ threatens the global economy.  After many years of impressive economic growth, China is showing more signs that its once-powerful economic engine is sputtering. This is one of the main reasons why crude oil has fallen below $30 a barrel and most stock markets have declined so far in 2016.  As China goes, so goes the global economy.   If China is forced to further devalue its currency to boost its exports and protect jobs, we can expect more trouble for global stock markets this year.

But is China really headed for a "hard landing" whereby their economy contracts sharply or perhaps even enters a full-blown recession?  Previously, I looked at the horoscope of the Shanghai stock exchange and found ample evidence for a significant decline in January.  The main Shanghai Index is has now fallen below 3000, a key technical support level.  Some analysts are now suggesting more downside to perhaps its previous low of 2000.  My assessment of this chart suggests that more downside is very likely this year.  The Saturn retrograde station in March will align closely with the Moon this chart, while the Uranus station (0 Aries) in the summer will square the natal Saturn (0 Capricorn).

Significantly, we can see a similar pattern of affliction this year in the national chart of China (1 October 1949).  Although stock market movements are only indirectly related to the national horoscope, economic conditions are usually reflected in the chart, especially when they diverge from the norm.  This is definitely the case in 2015 and 2016 as transiting Saturn (18 Scorpio) squares its natal position in the 8th house.  Saturn in the 8th house in Leo is a very conservative influence and reflects the necessity of maintaining strict political control over that society.  Since Saturn is the ruler of the chart (since it rules the 1st house Capricorn), the sense of restriction and conservatism is even more pronounced. 

To be sure, the aspect from Jupiter indicates that China benefits greatly from this reliance of tradition and order.  The stifling of political dissent and opposition to the one-party state has forced the population to focus on building the economy as a patriotic duty.  But when transiting Saturn casts its full-strength square aspect from Scorpio to natal Saturn, even this positive Jupiter influence is likely to be overwhelmed.  Frustration and national anxiety are likely to manifest with scandals (8th house) popping up with more frequency.  Recent months has seen a series of hedge fund managers and other highly placed investors disappearing for a time, presumably to be "interviewed" by the government.  Last summer’s stock market rout was deeply embarrassing to Beijing despite issuing edicts which banned short selling and forced major banks and brokerages to buy stocks in order to support prices.

The problem for China in 2016 is that Saturn will station at 22 Scorpio in March and then move backwards for the next four months.  It will thereby maintain is aspect to natal Saturn and this will likely keep the economic pressure on.  Saturn is first and foremost a restrictive influence, so all this Saturn energy will likely see the economy contract further this year.  Of course, Saturn also rules Aquarius, which is the ruler of the 2nd house of wealth in the national chart of China.  This ongoing Saturn transit will therefore likely see the net wealth of the country also decline, or possibly expand at a slower rate, at least for the duration of the transit.  The slowdown is more likely to be disruptive to society since both Uranus (22 Pisces) and Pluto (21 Sagittarius) align with the nodes, Rahu and Ketu.

I would expect China’s economy to continue to struggle throughout 2016 so a hard landing looks inevitable.  We will also likely see more authoritarian actions by the government as Beijing attempts to tame the capitalist tiger.  Transiting Rahu’s conjunction to natal Saturn in July will likely highlight another period of extreme instability.  Saturn’s square aspect will finally begin to separate and diminish in the fall. 

Weekly Market Forecast

Stocks fell again last week as crude oil extended its slide to below $30 a barrel for the first time since 2004.  US stocks fell 2% as the Dow finished at 15,988 while markets in India  also lost more than 2% as the BSE Sensex ended the week at 24,455.   In last week’s stock market forecast, I thought we might have got more gains on Thursday’s Sun-Mercury-Jupiter-Rahu alignment.  Thursday was higher in the US but stocks were lower for most of the rest of the week.   As I noted, however, the presence of unpredictable Rahu (North Lunar Node) somewhat lessened the favourability of this pattern. 

This week has started off modestly negative in Asia and Europe as US markets are closed for the MLK holiday.   There are no clear planetary indications for this week although it is hard to be optimistic.  The ongoing Jupiter-Rahu conjunction is still very close this week (and next) and that may make the prospects for a rebound more unlikely.  Another source of instability could be Mercury retrograde which conjoins Pluto and aligns with Uranus late in the week.   I’m not sure it will correlate with much downside this week, however.  It’s possible of course, but the problem is that Mercury will then align with planetary bad boys Mars and Saturn next week.  This alignment looks even worse so stocks could be under more pressure.  For more details on these and other alignments, please check out my subscriber newsletter.