Many of the world’s stock indices bottomed early last week

Imposing tariffs on China and other nations trying to send their goods to the U.S. not only raises the prices of those products for Americans, it also gives targeted nations an incentive to develop markets, and long-term trade ties in other countries, At the same time, those foreign nations can retaliate by cutting purchases of American goods, or by slapping retaliatory tariffs of their own on American products, making them less competitive. – Gerald F. Seib, “U.S. Risks Overusing Its Economic Weapons,” Wall Street Journal, May 14, 2019.

Trump might believe that he can bully Beijing into accepting a one-sided enforcement mechanism under which the United States is allowed to impose retaliatory tariffs in case of a dispute while China is not. That simply isn’t going to happen. Nor will China agree to stop subsidizing industries. Asians have subsidized capital-intensive industries since Japan’s 1868 Meiji Restoration, and that won’t change any time soon… “Forced technology transfers” to China are for the most part mythical. The reality is that America’s largest technology companies from Intel to Boeing are lining up to hand their technology to China in the context of their strategy for China’s domestic market. The emerging consensus is that Trump isn’t fooling anyone. At the end of the day he wants a deal as much as do the Chinese. – David P. Goldman, “Buy Chinese Stocks on the Dip,”  https://www.asiatimes.com, May 6, 2019.

It’s a classic conflict – battle – between cycles, geocosmic and technical studies, and fundamentals.

Many of the world’s stock indices bottomed early last week, after 2-3 weeks of tumultuous declines. These same equity markets then rallied nicely into the end of the week, before starting to pullback by the close on Friday. The entire period was bookended by the Sun/Uranus conjunction of April 22 and the Venus/Uranus conjunction of May 17. When Uranus is prominent, financial markets often become chaotic and unstable. The dramatic turns in equity markets often mirror the dramatic reversals in political and economic thinking (fundamentals). Thus, we have a condition where the studies of cycles and technical analysis indicate a correction should be over and a huge rally – consistent with the geocosmic placement of Jupiter in Sagittarius – should resume. Yet at the same time, the prominence of Uranus has investors on edge because of the sudden reversal in trade talks, especially between the U.S. and China, but also between the U.S. and Europe, and maybe other nations. This is exacerbated further by the President as he puts into action new tariffs, which are akin to taxes on the U.S. consumer, which in turn wipes out much of the economic gains that were initiated with his December 21, 2017 Tax Reform Act.

The two things we must constantly remind ourselves of from the geocosmic perspective is this: Jupiter in Sagittarius (November 8, 2018 through December 2, 2019) is theoretically a time when world trade increases. Trade deals would normally – naturally – be unfolding and worldwide economic growth would normally be expanding. Secondly, at the same time, Jupiter is in a three-passage series of a waning square aspects to Neptune, January-September 2019. The waning square is arguably the most difficult of all aspects to navigate easily through. Under such a combination, one must be careful not to believe anything you read or hear, for Jupiter tends to exaggerate (especially in Sagittarius) and Neptune tends to distract and veer far away from facts or truth. When one believes what is written or spoken, there is a risk of being misled, a setup for a major disappointment when things don’t go the way you were led to expect. It is a time of disillusionment, false hopes and futile wishes. Thus, financial markets, like stocks, rally because the investment community believes a trade deal is imminent. And then when it is suddenly alleged that one side has broken a promise (typical allegation under Jupiter/Neptune), and trade talks fall apart, the markets hemorrhage and a mini-crisis erupts. That is what happened April 22-May 17.

We saw this sudden reversal characteristic of Uranus erupt in Bitcoin too since April 22. A primary cycle bottomed on April 26 at 4983, right in the middle of Saturn and Pluto also turning retrograde. Then, in classical Uranus fashion (especially in the money sign of Taurus), Bitcoin exploded to a 9-month high of 8390 on May 16. By Friday, May 17, just one day later, it fell over 20% to 6620.

The uncertainty and confusion in the political and economic realm also buoyed treasury prices higher, as a “safe haven” location for investors to park monies until the trade dispute clears up. The Ten-Year Notes are near 125, approaching their highest level since late 2017. Usually, when T-Notes go up (interest rates come down), the U.S. Dollar goes down. But not this time, not under hard Uranus signatures where the norm no longer applies. The Dollar is going up, and combined with the Chinese cessation of buying Soybeans from the U.S. as a result of the U.S. increased tariffs on Chinese goods led to Soybean prices falling below $8.00/bu last week, something not seen in over 10 years. The President says that the tariffs on Chinese goods will be used to subsidize farmers going broke. But the problem is that farmers don’t want to make money through government subsidies while their crop is wasted. They want to sell their crop they worked hard to produce. When American farmers lose their markets, other nations will establish ties with China and other countries and U.S. farmers may not regain their market share for a long time.

 

SHORT-TERM GEOCOSMICS AND LONGER-TERM THOUGHTS

We recommend that as you continue to negotiate new trade deals with our allies, you pursue the endgame goal of zero tariffs. You have said on several occasions that your objective is not protectionism but “to create a level playing field on trade.” You have even suggested to our allies that both sides “drop all Tariffs, Barriers, and Subsidies.” Your Council of Economic Advisors report the average American tariff is 3.5% while the average EU rate is 5% (and) China is nearly 10%... We also believe that securing zero for zero trade deals would result in an expansion of global commerce that would reduce poverty and add trillions of dollars to the global economic output. (It) will help make the U.S. and world economies great again.  – Steve Forbes, Fred Smith, Stephen Moore, and Arthur Laffler of the Committee to Unleash Prosperity, “Mr. President, It’s Time for Zero Tariffs,” Wall Street Journal, October 18, 2018, and quoted in the Forecast 2019 Book.

Foreign Ministry spokesman Lu Kang laid out conditions for a return to negotiations. “First: principles. That means there has to be mutual respect, equality, and mutual benefit. Second: good faith. One must match words with actions.” – Lin Zhu, “China Plays Down U.S. Trade Talks,” Wall Street Journal, May 17, 2019.

Last week’s column elicited a lot of response from Trump supporters, questioning whether I think the U.S. and the White House should let China just run over Americans. I think the point I am making was missed. I am entirely for the White House negotiating, in good faith, for the best and fairest deal it can make to help Americans. And I believe the Chinese should – and will - do the same. My intent is much simpler. It is to alert readers to the consequences – danger – of using tariffs as a weapon to force the other side’s hand in negotiations. The history of doing so is not a pretty one (it was a major cause that led the world into the Great Depression, and by extension, World War II). When the tariffs first started in early 2018 (when Soybeans were trading over 30% higher), many commentators stated it would not lead to a trade war. This column warned otherwise. Indeed, it is a trade war now, and it just keeps escalating (remember: you cannot believe what you read and hear under Jupiter square Neptune – promises made are not usually kept). And now we are approaching the heart of the Jupiter/Neptune square, June 9-24, a time when many anticipate that the two leaders (China and the U.S.) will meet at the next G-20 meeting and work out a deal. Again, it is the major aspect of the year, and it pertains to disillusionment and grandiose false hopes, and perhaps announcements that will likely not be deliverable upon critical examination. I am not sure if a more inopportune cosmic time could have been chosen for an agreement to be made that will hold up over time.

But let’s briefly switch gears to the shorter-term cosmic outlook. The Venus/Uranus conjunction ends this weekend, concurrent with the full Moon in Scorpio. Venus and Scorpio are money indicators. Venus and Taurus rule the accumulation (saving) of monies, as well as agreements. With Uranus, it is hard to come by an agreement because Uranus is a maverick, a rebel, and not prone to agreeing to anything that it views as restrictive to its independence to do whatever it wishes. Scorpio pertains to the leveraging (debt) process of dealing with finances. The debt continues to escalate in the U.S. and is becoming a greater concern again – not to mention that China owns much of that debt via its U.S. Treasury holdings. Because they act like taxes (and taxes are also a Scorpio matter), the tariffs are front and center on investors’ minds right now. However, the turbulence of markets may start to calm down shortly, as developments of resuming trade talks are announced - until we get to June 9-24.

The Sun and Mercury both enter the intellectual and talkative sign of Gemini this week, on May 21. This is followed by a new Moon in Gemini on June 3-4. This implies many discussions taking place, a lot of new and innovative ideas developed to solve problems, if only the thinkers could reflect a moment and focus on each of these ideas fully - and not be tempted to dismiss them for more new ideas before seriously considering those that are already on the table. The danger is that negotiators (and leaders) become too scattered, too restless and unfocused, creating a sense of nervousness and inability to come to a solid plan before the dung hits the fan June 9-24, and then it is back to square one. Again, with all the hurried activity present May 21-June 4, investors are vulnerable to being duped into believing that a deal is ready to be cemented, only to be disappointed again because it hasn’t been well-thought out.

June will probably be the month where we see who really wants and needs a deal the most, who is most desperate for a deal, and who is most prepared to make a good deal. The most impatient party loses. The same can be said about the most inflexible party. Impatience and inflexibility are characteristics that can lead to another major disappointment. Let’s hope our leaders can rise above this and do something good that will be fair, equitable, and benefit the entire world. If not, we just get closer and closer to the Capricorn Stellium, with Saturn and Pluto conjunct, in January 2020. The consequences of today’s decisions and actions are likely to manifest then.