(24 March 2024) Stocks rebounded last week as Fed Chair Jerome Powell delivered surprisingly dovish comments after the latest FOMC policy meeting. The S&P 500 gained more than 2% on the week to 5234 while the rate-sensitive Nasdaq-100 added 3% to 18,339. This bullish outcome was quite unexpected as I thought we might have seen some post-FOMC fallout on the Saturn-Mercury-Chiron alignment.
This melt-up rally seems unstoppable. The Fed did investors a big favor last week as Powell suggested that slightly higher inflation (i.e. above 3%) would not necessarily preclude any rate cuts. In signaling the Fed’s willingness to tolerate higher inflation, Powell opened the door to three rate cuts in 2024. In so doing, the Fed appeared to be abandoning its commitment to its longstanding 2% target. If the target is well and truly gone, it would be a major development in central bank policy as a return to the pre-Covid status quo would now be off the table. The acceptance of higher inflation would solve two problems as it would serve to support stock prices and would keep bond yields relatively low in order to better finance the burgeoning government debt. As usual, the bond market is taking a skeptical view as yields didn’t come down very much last week. Both the 10-year and the 2-year yield charts look bullish and point to higher yields down the road. Higher yields would reflect continued inflation pressures which would likely force the Fed to hold rates steady and thus renege on their promised cuts. Higher yields would also likely be a problem for stocks which have already priced in four cuts this year.
The planetary outlook is mixed. Clearly, the late March pullback I expected hasn’t materialized as the minor Saturn alignments with Pluto, Rahu and Chiron did not coincide with any selling whatsoever. Even if our downside expectations were modest, the continuation of the rally is disappointing. Therefore, it seems more likely that bulls will stay in control a bit longer as Jupiter approaches its conjunction with Uranus on April 19. The last two Jupiter-Uranus conjunctions coincided with significant gains in June-Dec 2010 (after the May 2010 flash crash) and in Jan-Feb 1997. While this is a strongly bullish conjunction, I am not convinced that stocks will continue to rise into that date. One reason why markets could become choppy before April 19 is due to the volatile Mars-Saturn-Rahu alignment on Apr 8-12…
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This week (Mar 25-29) has a bullish bias. Monday’s Full Moon is also a lunar eclipse and could coincide with some volatility as Mars forms a minor alignment with Rahu. However, since the eclipse point (11 Virgo) does not align with any significant planet or point in the key natal charts, I would be less inclined to expect a large move to start the week. Indeed, the Venus alignment with Jupiter and Rahu looks quite bullish and could exert an influence as early as Monday, although Tuesday and Wednesday look to be more likely candidates for some upside from this bullish pattern..
