(1 October 2023) US stocks were mostly lower last week as ongoing inflation worries and a likely government shutdown over the weekend weighed on sentiment. After a choppy week, the S&P 500 was down less than 1% to 4288 while the Nasdaq-100 ended fractionally higher at 14,715. This bearish outcome was in line with expectations as I thought the Venus-Mars velocity alignment might coincide with some selling. The late week was somewhat less bearish than expected, however, as Friday’s Mars-Mercury alignment brought only modest selling.
Despite Friday’s lower PCE inflation number, markets are still fixated on rising bond yields and their implication for the wider economy. With crude oil prices showing few signs of coming down, the benchmark 10-year Treasury pushed to new highs yet again last week at 4.59%. The rally in yields not only reflects the ‘higher for longer’ mantra of the Fed, but that the bond market does not expect inflation to hit its 2% target anytime soon. Even if the FedWatch tool is not assuming in any more rate hikes this year, the first cut in rates is not likely until the summer of 2024. The fear is that these elevated rates will begin to seriously undermine consumer confidence as soon as October given the UAW strike, the government shutdown and the imminent restarting of student loan repayments. Despite these gathering storm clouds, prospects for a recession are low as long as the labor market stays robust. But once jobless claims and unemployment begin to rise, the stagflation narrative of low growth and high inflation may begin to take hold. If the inflation spike was bad for the stock market in 2022, stagflation and recession are likely to be equally difficult as we head into 2024.
The planetary outlook is bearish. Thus far, we are about halfway through the gauntlet of bearish Mars alignments. Stocks started selling in tandem with the Mars aspects to Jupiter and Saturn during the Fed week (Sep 18-22) and stayed fairly weak with last week’s alignments with Mercury, Venus and Uranus. Along with Saturn, Mars is a bearish planet by nature which tends to coincide with declines when it forms close alignments with other planets. While Mars transits tend to relatively short-lived – just a day or two – the current situation has been more negative for markets due to the unusually higher number of alignments in quick succession. This week upcoming is likely to have a bearish bias since Mars will align with Ketu (South Lunar Node), Neptune and eventually Pluto.
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Photo Credit: Russell Charters
