(24 August 2022) Stocks look more vulnerable here in the waning dog days of summer as inflation remains a primary concern, especially in Europe. Much of the summer rally had been predicated on the assumption that inflation may have peaked in the US and that this could pave the way to a more dovish Fed that would be less hawkish in its commitment to interest rate hikes. While US inflation has eased off somewhat, European inflation continues to rise as energy prices have reached a crisis level given the ongoing disruption from the Ukraine-Russia war.
But all eyes will be on Fed Chair Jerome Powell on Friday as he delivers his annual speech from Jackson Hole, Wyoming. Powell is expected to reveal his current plan to tackle inflation and whether or not the Fed will to slow the pace of rate hikes starting with its next FOMC meeting on September 21. Being creatures of liquidity, investors will be hoping for any dovish signals from Powell, perhaps as a response to some recent data that suggest the economy may be slowing. If, however, Powell reiterates his commitment to reducing inflation to the Fed’s long term target of 2%, the market could sell-off on the prospect of significantly higher interest rates down the road.
A look at the horoscope of the Federal Reserve reflects the potential precariousness of the current economic situation. Typically, the economy tends to do well this chart is strengthened by Jupiter and other benefics as it reflects a Fed that is successfully managing an economic expansion. When the chart is afflicted by Saturn or other malefics, however, that can mean a more stressful time for the Fed and greater economic uncertainty.
The main problem here is that Saturn (27 Capricorn) conjoins the 8th house cusp (25 Capricorn) representing obstacles, setbacks and scandals. Saturn is usually a difficult energy whenever it closely aligns with a planet or cusp and that is very much the case here since the 8th house is considered the most malefic house in the chart. Saturn is currently retrograde and is due to station direct on October 23 at 24 degrees of sidereal Capricorn. This will be just one degree past an exact conjunction with the 8th house cusp and a 150-degree alignment with the Ascendant. Regardless of the immediate aftermath of the Jackson Hole speech, it does suggest the Fed is entering a period of higher stress for the next two months or so while the Saturn alignment is in range.
The outlook isn’t entirely negative, however, as retrograde Jupiter will be approaching a conjunction with the 10th house cusp (MC) in October and November. This is a very positive influence and suggests the Fed will eventually assume a more positive leadership role where it could be praised for its actions. While the Jupiter influence is very strong here, it does not override the likely damage from Saturn. No doubt, the Fed will encounter both positive and negative situations as a result of these dueling influences. I do suspect that Saturn’s negative influence is more likely to manifest first since Saturn will resume normal forward motion first, while Jupiter will resume its forward motion on November 23.
In terms of the immediate reaction to Friday’s Jackson Hole speech, the Mars-Sun square looks quite tense and suggests an atmosphere of caution is more likely to prevail. Along with the Moon-Mars conjunction, this alignment increases the likelihood of a negative market reaction to Powell’s speech. Also, we should note the presence of benefics Mercury and Venus in the chart on Friday. Although usually positive, Mercury is placed at the very bottom of the chart opposite the 10th house and hints at “unfortunate communication” while the Venus opposition to Saturn signifies restraint and loss. It therefore seems less likely that Powell will suddenly turn dovish and pause the rate hikes. We shall see how it all unfolds.
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