Weekly column: Mercury's dance and market divergences

Review

The U.S. economy added 216,000 jobs last month, the Labor Department reported Friday. That was larger than November’s gain of 173,000, and better than forecasters were expecting. For all of 2023, employers added 2.7 million jobs, a slowdown from 4.8 million in 2022, but a better gain than in the several years preceding the pandemic. Wages rose a healthy 4.1% last month from a year earlier and the unemployment rate in December held at 3.7%. The labor market’s slowing but steady pace during 2023, coupled with a sharp slowdown in inflation, has fueled optimism that the economy can achieve a so-called soft landing. That would mean inflation eases without a recession. Amara Omeokwe and Chip Cutter, “Job Gains Picked Up in December,” Wall Street Journal, January 5, 2024.

It’s a New Year and a new Mercury cycle. A lot has happened since our last column two weeks ago.

The new year started out with 1) the DJIA and many other global stock markets making multi-year or secondary highs on January 2, the first day of trading, and then reversing, as 2) the Trickster (Mercury retrograde) headed back into hibernation for the rest of this winter. Did we just see the primary cycle crest or double top in global stock markets on January 2?

The only markets making new all-time highs in the past two weeks were the DJIA and India’s Nifty index. The London FTSE and Australian ASX made multi-month highs on January 2. But most others only recorded a secondary high to December’s highs, and then all retreated into Friday. Thus, we have multiple cases of intermarket bearish divergence in regions across the globe, which begs the question as to whether a sharp decline is beginning. The exception to this pattern last week was China’s Shanghai Composite, which made a 20-month low on December 22 and exhibited a rather weak-looking rebound last week.

Bitcoin and Ethereum followed a similar pattern, with BTC making a new yearly high on January 2. Still Ethereum’s yearly high was the prior week, for a case of intermarket bearish divergence there too. Traders are waiting for approval of a Bitcoin ETF due this coming week. But most of the price appreciation on that announcement may already be baked into the recent new yearly highs.

Gold and Silver also attended rallies, but both fizzled after January 2 at lower levels than their highs in December. Our concern is that a 16.5-month cycle to new muti-month lows may be underway.

Crude Oil, on the other hand, looks much more promising. A primary bottom may be in as of December 13 with a secondary challenge on January 3. Prices have rallied most of last week on the announcement that the U.S. is ready to start replenishing its Strategic Petroleum Reserves (SPR). But that was the idea the last time when Crude fell below 70.00, and the administration failed then to get back before prices rose.

Short-term geocosmics

 “A life lived in service is not a sacrifice, but an honor.” Queen Elizabeth, “The Crown,” Netflix, Season 6, Episode 9.

Mars entered Capricorn on Thursday, January 4, where it will reign in exaltation until February 13. Peace treaties and/or ceasefires and a winding down of violence in the Middle East can start to take place by the end of this period. Therefore, until then – and maybe beyond – Crude Oil can still rally as it tends to exhibit wider price swings with this ingress.

Next, we find two favorable trine aspects unfolding. The first is the Sun/Uranus waning trine on January 10, followed by the Mars/Jupiter waning trine on January 12. This may coincide with a favorable movement in tech-related and energy markets. However, a more important aspect will be the Sun/Pluto duo, both ingressing into Aquarius together on January 20-21. The 0° Aquarius point is the important “super-charged degree” related to the “New Aira” of December 21, 2020 (Jupiter/Saturn conjunction) as described in the Forecast 2024 book. The parallel paradigms of war and technological renaissance (AI) may be highlighted as news events around this time. So, there may be announcements regarding high-visibility court cases and decisions (Donald Trump), as well as new policy announcements regarding the recent scandal in higher education (Harvard).

Longer-term thoughts

Back in 2023, Mr. Biden could—and should—have decided to be a one-term president. He would have been revered as a paragon of public service and a rebuke to Mr. Trump’s boundless ego. Democratic bigwigs know this… Unfortunately, Mr. Biden and his party had several reasons for him fighting one more campaign, none of them good. His sense of duty was tainted by vanity. Having first stood for president in 1987 and labored for so long to sit behind the Resolute desk, he has been seduced into believing that his country needs him because he is a proven Trump-beater. Likewise, his staff’s desire to serve has surely been tainted by ambition. It is in the nature of administrations that many of a president’s closest advisers will never again be so close to power. Zanny Minton Beddoes, “The Man Supposed to Stop Donald Trump is an Unpopular 81-Year Old”, The Economist, January 4, 2024.

With Donald Trump leading the 2024 polls while calling for a 10% universal tariff, the new GOP protectionists are trying to sell this idea as a boon for the working class. The evidence exposes this folly: Trade wars invite painful retaliation, prop up politically favored industries at the expense of others, and raise prices on consumers like an invisible tax. They hurt the average worker. The economic literature on this point is voluminous. “Trump’s Tariffs and the Common Man,” Wall Street Journal Opinion Page, January 2, 2024.

The idea that higher tariffs are a sound economic strategy is nonsense and even goes to the point of delusion, especially in today’s world. That is because tariffs mean higher prices for consumers since – once again, after a lag – they will be a leading cause of higher prices and inflation, just as was the case in 2021. Yes, there were additional causes of inflation, such as the out-of-control government stimulus packages and the overly easy accommodative Federal Reserve monetary policy. But the initial cause for inflation was the disruption in the global supply chains caused by the Trump tariffs and, in my honest opinion, misguided isolationist leanings. Supplies became limited, and when you dimmish supplies, the result is higher prices unless you also diminish demand, which was not and will not be the case.

In fact, the inflation cycle is very close to the same point it was in during the previous Saturn/Uranus waning square cycle. That is, Saturn squared Uranus in 1975-1976. Inflation was cranking up from 3% in early 1973 to double digits (12%) by early 1975. By the end of 1976, it was back to 4.9%. But then it had a second wind, taking consumer prices up to nearly 15% by early 1980. Now, a 45-year Saturn/Uranus cycle later, we witnessed inflation down to 1% in 2020. Then, as the next Saturn/Uranus square went into effect from January 2021 to October 2022, inflation spiked sharply to 9% before starting to back down. Presently, it is about 3%. It is not a perfect 45-year fit, but as Mark Twain said, it’s “close enough that it rhymes.”

Based on my understanding of what the present administration is trying to do and what former-President Trump plans to do if re-elected, I see another surge in inflation coming in 2025. If Trump wins, there will be tariffs leading to another disruption in the global supply chain. If Biden wins, it will be because the White House (in concert with the Fed, whose chairman had a nasty experience with Trump from 2018 to 2020) will try to bring mortgage rates down to 5.5% (they are already on the way). This, too, will stimulate a renewal of rising home prices. At first, home prices will be steady as competition between new sellers and new buyers grows (and Jupiter is in the stable sign of Taurus until late May). Then they start climbing higher (after a lag), which will likely happen soon after the election and maybe as Jupiter enters Gemini in late May. Homeowners will either begin to sell or refinance their homes and thus, they will have more money to spend. That’s inflationary, too, and fits the rhyming of the 45-year Saturn/Uranus cycle.

There are other factors that fit into this narrative I am anticipating. We have a cosmic conflict between the approaching Chiron/North Node/solar eclipse of late March or early April versus the Jupiter/Uranus conjunction of April 21. The former has a strong correlation to recessions and longer-term stock market cycle lows within the following year, while the Jupiter/Uranus conjunction more often correlates with new all-time or multi-year highs sometime between the aspect date and the following year. We could see both. That is new all-time stock market highs into spring/summer, followed by a sharp decline and recession by the middle of 2025. The Jupiter/Uranus cycle can also correlate with new inflationary readings anytime between April and the end of the year (again, there is a lag effect between the cycle and the reports). I don’t see the U.S. coming out of this potential economic misjudgment fiasco until we get to the middle of the “Aries Vortex” in 2026 or later.