Weekly column: Jupiter's shift and the end of easy money

Review

“Attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

—Warren Buffett, as quoted by Jason Zweig in “What Our Brains Know About Stocks—but Won’t Tell Us,” Wall Street Journal, May 24, 2024.

Higher real wages are an antidote to inflation. But voters tend to regard higher pay as the just reward for harder work, not as gratuitously higher living standards. If better pay is perceived as the result of personal endeavor, politicians receive no credit.

—Dr. Paul Donovan, “The Politics of Economics,” UBS Weekly Blog, May 24, 2024.

Everything is possible. Nothing is permitted.

—Robert Thibodeau of Mayflower Bookshop, Berkley, Michigan.

We anticipated this would be a wild and chaotic time for financial markets; indeed, it is starting out that way. The convergence and translation of the Sun and Venus over the Jupiter/Uranus conjunction in the “money sign” of Taurus corresponded to a sudden and sharp reversal in many financial markets last week, including equities and precious metals. Both of these sectors made new all-time or multi-year highs last week, then experienced sudden reversals to the downside. Is this a sign of trouble ahead as Jupiter starts its one-year trek through the volatile and changeable sign of Gemini?

Last week’s column asked: “How long can this euphoria and bullish behavior last? With the emphasis in Taurus, traders and investors are prone to be complacent. That may be an unwise choice of activity, as the convergence of all the planetary benefics in Taurus is coming to an end.” Last week, we got an initial trigger that trouble is brewing in these markets. Bitcoin and Ethereum may be the exception.

There is no confirmation yet that the gong has been rung on these bull markets. You seldom hear the gong —or realize the gong has been rung—until panic sets in. Yet the behavior of markets last week is typical of how bull markets often behave near their end. There can be false breakouts initially. But when stock indices are this late in their four-year cycle, every bearish trigger has to be respected as a possible gong ringer. For example, over 90% of four-year U.S. stock market cycles since 1893 have topped out by their 49th month. May is the 50th month since the 4-year cycle began with the “COVID-19 Pandemic Panic of March 2020.” Furthermore, the 4-year cycle trough has occurred by the 56th month in over 90% of those cases. Thus, the U.S. stock market is due for both a crest and a trough within the next six months, and the crest will happen first.

Short-term geocosmics

Credit is the giving of buying power. The buying power is granted in exchange for a promise to pay it back, which is debt. (The) question of whether rapid credit/debt growth is a good or bad thing hinges in what that credit produces and how the debt is repaid (i.e., how the debt is serviced).

—Ray Dalio, Principles for Navigating Big Debt Crises: The Archetypal Big Debt Cycle, Bridgewater, 2018.

Commissioner Danny Werfel appeared before the House Appropriations Committee recently and told legislators that the IRS faces financial collapse…. In other words, the IRS doesn’t think the $60 billion bonus it received from Congress in 2022 is enough, though it is supposed to last through 2031. The IRS has a brilliant solution for this cash burn: Add more to the pile. Instead of explaining where the money went, Mr. Werfel asked the House to look away and grant his team another massive funding boost, this time through 2034.

—The Editorial Board, “The IRS Money Hole Gets Deeper,” Wall Street Journal Opinion: Review and Outlook, May 22, 2024.

So the question pertinent to the quotes above is: Did the $60 billion credit (bonus) given to the IRS produce anything of value for the debt incurred? For that matter, is anything of lasting value (as an investment) being created for all the debt the governments of the world (especially in the U.S.) are taking on? At what point does this debt explosion without a comparable (and ideally, more favorable) return of value result in an economic crisis?

We have discussed the history of the Jupiter/Uranus 14-year synodic cycle and its correlation to highs in stock markets 1-7 months afterwards (and usually 1-4 months afterwards). That cycle began when the conjunction took place on April 20, and we are now well into the 1-4 month aftermath when new highs usually occur (and as of last week, they have). However, there is another important long-term cycle to discuss, known as the first 1/8 phase (or harmonic) of the 32-37 year Saturn/Pluto cycle now underway, from May 6, 2024, to January 26, 2025.

Why is this important? Firstly, the first 1/8 phase is the “abort” stage of the cycle that starts with the conjunction. It is a time when one reflects back upon decisions made—and new directions that were initiated—during the time of the conjunction. Those decisions are now tested, and another decision to either continue in that direction or abort it is demanded. Secondly, Saturn/Pluto has to do with debt and credit. It correlates well with the interest rate cycle when central banks either tighten or loosen monetary policy, which in turn affects financial markets.

The conjunction of Saturn and Pluto occurred on January 12, 2020. Within a month, the stock market had topped out, and the coronavirus pandemic crisis erupted, which led to extremely accommodative monetary and governmental stimulus policies as the stock market tanked. The nation’s debt skyrocketed. In fact, the debt of many nations skyrocketed then and was a primary cause of the soaring inflation that followed a year later throughout the world. Central banks were late, but they finally started increasing interest rates to fight inflation. Now, the Fed and other central banks of the world are reviewing those decisions in light of the fact that worldwide debt has continued to explode despite the comparatively high interest rates. But it does seem to be pulling the pace of inflation down.

However, there is another subtle geocosmic issue that may be involved here. Saturn/Pluto can also coincide with a “black swan” event that suddenly destabilizes markets. No one likes to—or even can consistently—predict a black swan event. Yet this is often the case when a market has its first 1/8 sub-cycle (harmonic) underway of a longer-term planetary cycle, especially one involving Saturn, Uranus, and/or Pluto with one another.

Remember that the first 1/8 harmonic (semi-square) of the Jupiter/Saturn cycle occurred in 2022, just before Russia invaded Ukraine and started the seeds of a possible World War III (yes, I know, many believe the United States and NATO started this war by not honoring their agreements made in 1989—1990). But this Saturn/Pluto aspect is more of a true “black swan” event possibility because the conjunction coincided with an unexpected generational pandemic (as well as the assassination of Iranian General Qassem Soleimani, which could have started a world war as well).

During that period, the U.S. stock market fell nearly 40% in one month, and the economy fell into a sudden, sharp, but short-lived recession. At the same time, the U.S. took on huge new debt in the form of drastic new stimulus packages and prolonged (too long) monetary easing measures.

The first 1/8 phase (45°) of a planetary cycle is when similar themes return that were present during the conjunction period. It could be magnified this time because a 4-year stock market cycle (low) is also due during this planetary phase.

We are also coming to the end of favorable Jupiter transiting aspects with a trine to Pluto next weekend, June 2. From there, Jupiter will begin its march towards the three-passage series of square aspects to Saturn, August 2024 through June 2025. It’s a different collective psychology than the soft and euphoric aspects Jupiter has been expressing with Uranus, Neptune, and Pluto.

With hard aspects involving Saturn, it is probably wise to be prepared and have a plan. Regarding trading and investing, I find it smarter to risk protecting oneself too early rather than too late. I also find with Jupiter, in any aspect to Saturn, that wise people are more apt to be more cautious than reckless. A constructive plan for the future would be to make sure you have cash to buy goods (such as stocks and perhaps commodities) when they are offered at more affordable prices, along the lines of the Warren Buffett quote given at the beginning of this week’s column.