On the hope of a resolution and agreement, equity prices rally

Note: Monday is a holiday – Memorial Day – in the USA. Markets will be closed.

Britain’s Theresa May announced her resignation as prime minister on Friday morning, drawing her turbulent three-year premiership to an abrupt end. She will step down as Conservative Party leader on June 7. – Sam Meredith and David Reid, “Teresa May Resigns as UK Prime Minister Amid Brexit Crisis,” https://www.cnbc.com, May 24, 2019.

President Donald Trump signaled Thursday that a trade deal with China could lift tough restrictions on the Chinese telecom giant Huawei. “If we made a deal, I can imagine Huawei being included in some form or some part of a trade deal,” Trump said to White House reporters. He also predicted a swift end to the ongoing trade tensions. – Chloe Taylor and Ryan Browne, “European Stocks Close Higher as Trade Jitters Fade,” https://www.cnbc.com, May 24, 2019.

It was certainly a Gemini type of week for the stock markets of the world. That is, some markets were strong, like the Australian ASX, which soared to its highest level since 2007, and India’s Nifty index, which made a new-all time as Prime Minister Narendra Modi was re-elected. Others were weak, falling to multi-week lows, as in the Netherlands, China, Hong Kong and the NASDAQ Composite of the USA. Still others were in between, trading below the prior week’s high but also above the prior week’s low (this is known as an “inside week”), as in the Dow Jones Industrial Average, Japan’s Nikkei Index, and several of the European indices.

This erratic activity, with several examples of regional divergences (some indices made new multi-week lows, others did not, and some made multi-year highs and others did not) is characteristic of Gemini. On May 21, both the Sun and Mercury (the latter is the ruler of Gemini) entered the sign of Gemini, often associated with intellects and geniuses, but almost never associated with the idea of being “stable.” Eccentric maybe, even capable of brilliance and cleverness. Hence, in Gemini-like fashion, global stock markets showed flashes of bullishness early in the week under the Venus/Uranus conjunction, as if it they wanted to break back to the upside after the large losses experienced since May 1, only to falter again as the week wore on. And, in spite of a Friday rally after Thursday’s secondary (or new) lows, worries about the world trade situation still loom like an approaching storm cloud over the world financial markets. Positive political signals on trade were mildly delivered, but nothing got resolved. Nobody budged.

Other markets also posted notable activity and signs of intermarket bullish divergence. Silver for instance, fell to 14.35 last week, its lowest level of 2019. But Gold did not. It tested its low of May 2, but held, and then both markets spurted up to weekly highs on Thursday, for a case of intermarket bullish divergence. The same occurred in currency markets, where the Euro fell to 1.1106 on May 23, its lowest price in two years. However, the Swiss Franc did not fall, but instead rallied to its highest level since April 16. Crude Oil fell hard, to 57.33 on Thursday, May 23, its lowest mark in over two months. Treasuries continued their impressive rally, reaching their highest level since 2017, and once again demonstrating their status as a “safe haven” in unstable times.

 

SHORT-TERM GEOCOSMICS AND LONGER-TERM THOUGHTS

Whatever other assets and liabilities he brings to the table, President Trump certainly offers this: He is a master at sowing uncertainty, so neither friend nor foe really knows what he is up to. – Gerald F. Seib, “Risks are High as Trump Pushes Hard on Iran,” Wall Street Journal, May 21, 2019.

All warfare is based on deception… If your opponent is of choleric temper, seek to irritate him. Pretend to grow weak, that he may grow to be arrogant. Sun Zu, “The Art of War,” 5th century BC (email from colleague)

June 9-24 is one of the most intriguing time bands of the year containing several geocosmic signatures. Let me first identify the unusual cosmic combinations that will be operative then, followed by an explanation of how these dynamics might work out, bearing in mind that the end result is very much unknown, even at this late date. However, it is important to discuss this now, because the behaviors of world leaders, and the events that have unfolded in the past three weeks, are already exhibiting the bizarre dynamics associated with these geocosmic forces.

First of all, this is the period in which the second (of three) passage of the Jupiter/Neptune waning square takes place (June 16). This is the most dominant aspect of 2019, and happens three times due to Jupiter’s retrograde motion (January 13 and September 21 are the others). The time band begins with the Sun making a T-square to Jupiter and Neptune (June 8-9) and it ends with Venus making a T-square to Jupiter and Neptune (June 23-24). Also, Neptune will turn retrograde on the summer solstice of June 21.

To understand this period, then, we need to understand the nature of Neptune in its ruling sign Pisces, especially as it is being squared by Jupiter in its ruling sign of Sagittarius. The key is the waning square aspect, arguably the most challenging of all aspects to work with. At its most virtuous (for Neptune and Pisces are symbolic of the quest for virtue), it highlights the generosity and optimism of Jupiter and Sagittarius. We saw a wonderful example of such generosity and kindness of spirit exhibited by Robert P. Smith, a billionaire who was the keynote speaker for Morehouse College’s commencement ceremony on May 19. He gifted $40 million to cover the student loans of about 400 graduates. To say this was a stunning surprise to those graduates is an understatement. It was dubbed “a liberation gift.” Freedom and liberation are qualities associated with Jupiter and Sagittarius. These young students can now advance in life without the burden of student debt that weighs down so many other college graduates today.

This is the type of behavior and spirit that is always possible under Jupiter/Neptune, if one would only make the effort to be kind and generous to others in need where one can afford it.

Because this aspect wants to believe in magic, believe in the goodness of others, believe that miracles can and do happen, it lends itself to optimism. With Jupiter, it can be overly optimistic, overly confident, and often with no basis in reality – only in hopes and wishes (Neptune). Jupiter and Sagittarius rule world trade too, so it is not surprising that people want to believe a trade deal will work out. And in fact, in many parts of the world, trade deals are being worked out and many countries are experiencing the benefits of an increase in world trade that would normally happen under Jupiter in Sagittarius. Except in the United States, where its citizens believe it will eventually work out. But to work out, there needs to be a generosity of spirit and kindness. Otherwise the downside of Jupiter square Neptune is apt to manifest. And that is disillusionment, the breakdown of the processes that everyone thought were working out, working towards some kind of a mutually beneficial resolution. Neptune is the fog. It can represent the disintegration of that which once appeared to be realistic and possible. The hopes and wishes go up in smoke (another symbolism of Neptune in Pisces). When that happens, finger-pointing and name calling begins. People look for scapegoats to blame, to explain why the promise never materialized, why something so positive suddenly dissolved. Accusations of deception, betrayal, reneging on promises, are all part of the reaction that goes along with Jupiter square Neptune.

At its worst, what was once hopeful and optimistic quickly turns into loss of control. Hence, Jupiter/Neptune aspects are associated with periods of both “irrational exuberance,” which drive equity prices to new highs, but also hysteria and panic, which lead to large losses. It is an aspect of delusion of grandeur as well as delusions of persecution, mania as well as depression. One may claim to be a genius, strong, and successful, then also claim to be a victim, while others allege he/she is a fraud, a hoax, a clown, “messed up,” or needs some kind of psychological intervention. It gets personal. People lose control. They can act crazy. They may “lose it” and they may need intervention or a vacation if they are not grounded. This is not a favorable period for confrontations, which tend to end badly.

As we head into June 9-24, this is the hope and the danger. On the hope of a resolution and agreement, equity prices rally. On the disappointment over setbacks in this process, equity prices fall. Previously I stated the only threat to the American economy is the political threat, and this is proving to be the case.

The June 9-24 period is additionally important and challenging because at the same time there will be an opposition of Mars and the Moon’s North Node in Cancer to Saturn, Pluto and the South Node of the Moon in Capricorn. This is the dynamic that has an urge to try and force others to its will, to fight until the end, to not budge, but rather to demand and issue threats. It is war-like.

Yet, this opposition is broken up by Neptune, which sextiles Saturn/Pluto and trines the Mars/North Node. There is great danger to the world financial system, but there is also an avenue for constructive progress to be made, signified by the qualities of Neptune in Pisces. It is the cosmic key to successfully navigating this very risky period. The positive side of Neptune is kindness of spirit and understanding, compassion, empathy, listening to others. The downside is to resort to allegations and name-calling, blaming others for the sad state of affairs and accepting no responsibility for one’s own actions. Those types of complaints will only push the situation further into the swamp or fog (also Neptune qualities).

In terms of financial markets, all we can say at this point is that the June 9-24 time band is already exhibiting both the positive and negative characteristics of the Jupiter/Neptune square. If the positive begins to dominate and there are signs of a resolution and agreement brewing, stocks will rally. In fact, they will explode if a deal can be consummated. If not, and there is another disillusioning disappointment again during that period, look for a tsunami or hurricane to strike financial markets, a possible meltdown. The risks are great and the result is still to be determined. Equities are not the only market to be affected by the political events of June 9-24, Crude Oil also stands out, as does precious metals. Both of these markets have a historical correlation to the completion of primary cycles or their secondary reactions during this period.

There will be ample opportunities for significant profits to be made by traders who are on the right side of a trade – or several trades – that will be offered, if the historical correlation of the past is present again during this time band.