Where are all the bears now?

[Tyler Durden]

Time for a little 'sequester' to bring the bears back from their cave?

http://www.abc.net.au/news/2013-03-02/obama-signs-order-for-budget-cuts-after-talks-fail/4549136?section=business

Sounds exciting.

In terms of long term planning, is this necessarily such a bad thing? Isn't it just one way of cleansing an economy that is spending more than it earns?

 

[Tyler Durden]

Very interesting article:

''How come the sharemarket is going up, when the economy keeps tanking?''

The textbook answer to this question is that share prices don't reflect the world as it is, but as investors expect it to be a year or two from now. Markets are forward-looking indicators, not backward ones.

...

In any case, chief executives are not yet expecting the strong cyclical upturn which markets seem to be pointing to. If companies themselves don't think highly enough of our economic prospects to start investing, how come investors do? There are two interrelated explanations.

One concerns a major curiosity of the present downturn. To many, this has looked like a full-blown depression. Britain has actually had a deeper and longer contraction than that of the 1930s. But it's not felt that way to companies, outside the banking sector at least. After a brief, post-Lehman dip, largely caused by collapsing financial sector returns, corporate profits have soared.

Earnings are at record levels, and corporate balance sheets have never been stronger. Corporate insolvency, especially of the big, household name variety, is comparatively rare, making this a very unusual downturn by past standards. Normally, during a prolonged credit squeeze, companies go out of business in their thousands. But it's not happened this time on anywhere near the scale you'd expect for such a prolonged economic malaise.

Why? One reason is zero interest rates, allowing companies which, in a conventional recession, would have gone bust, to stay in business. At the same time, banks have been bailed out, so that bad debts have in effect been nationalised. Taxpayers rather than investors are being made to pay the price for past excesses. The insolvency problem has been transferred from the private to the public sector.

In this sense, action by policymakers has ensured that this time really is different. It's labour rather than capital which has been most damaged by the downturn. In sending share prices to record highs, investors are only just beginning to catch up with this reality.

http://www.theage.com.au/business/this-time-it-really-is-going-to-be-different-20130308-2fqw0.html

I think every time there has been a significant bull or bear trend, someone says "this time it's different", as if to imply that it will last. To me, it's never different. There will always be greed and fear, which drives the market up and down.

 

[Tyler Durden]

This is why I'm still a bear:

The question that is being debated increasingly actively inside the EU is whether enough is being done. Job queues in Spain and almost everywhere in Europe, with the exception of Germany, are dangerously high and still growing.

Data released this month showed that employment in the 17 nation euro area fell by 0.3 per cent in the December quarter and by 0.7 per cent in 2012. Employment in Spain fell by 4.5 per cent and the unemployment rate in Spain in January was 26.2 per cent: Spain's youth unemployment rate is 55 per cent.

Employment in Greece, Portugal, Italy, France Denmark, Belgium, the Netherlands and Finland also fell in 2012, and unemployment across the euro area climbed from 10.8 per cent to 11.9 per cent in the year to January. The unemployment rate in Greece is about 27 per cent. In France it is 10.6 per cent and in Italy is 11.7 per cent

http://www.smh.com.au/business/europes-debt-shaded-by-cost-of-managing-it-20130315-2g67y.html

 

[pixel]

While I'm by no means a perma-Bear, over the past few weeks I have noticed an increasing number of indications that a top "of sorts" may have been reached or be imminent. As one of many examples, let's check the US S&P500:

Judging by the volume spike, last night was a witching day in the US.
Scrolling back through last year, similar spikes were recorded on 16/03, 15/06, 21/09, and 21/12.
That in itself doesn't mean much, as far as trend prediction is concerned. In the past, those witching days have not consistently led to significant changes of trend. However, in combination with the Bearish MACD Divergence, it's probably a good idea to be prepared for a pullback.

How far? If it's a mild one, it may only drop by about 30 points. But as the recent rally looks rather overdone on lowly volume, I doubt it'll stop at the previous High; so I'd guess 1500-1510 could be our first support zone. Failing that, 1480 or even the low 1460's could come into play.



PS: Shanghai has already reached a top a few weeks ago; if that plays out as a Head and Shoulders pattern, even the lower support zone could come under threat, which would translate into a 20% drop from the early February Highs:

 

[Trembling Hand]

Judging by the volume spike, last night was a witching day in the US.

So what?

 

[Tyler Durden]

Remember how at the beginning of the year, there were a lot of published opinions about how this year would be a bull market? Then Cyprus happened...

There were also articles about how this would be a bull market for gold as well...and now the last two days have happened...

I am still calling 2013 to be an overall bear-ish year.

 

[howmanyru]

Remember how at the beginning of the year, there were a lot of published opinions about how this year would be a bull market? Then Cyprus happened...

There were also articles about how this would be a bull market for gold as well...and now the last two days have happened...

I am still calling 2013 to be an overall bear-ish year.

I tend to agree. Funny, i went to visit my local motorcycle store yesterday only to see a big fence surrounding it, - gone bust. So i drove to the next store, empty. No motorcycles to look at, so went to the local bargain centre that's been there forever - gone broke. It was an ominous feel, also noticed lots of vacant shops. Sure, motorcycles are discretionary, but to me it's an early warning sign that tradies (and others) are not buying their toys any more. Then i spoke to another guy selling motorcycle accessories, said it's the worst market he has seen for 30 years. All that money printing is not making it into the real economy.

 

[FlyingFox]

I tend to agree. Funny, i went to visit my local motorcycle store yesterday only to see a big fence surrounding it, - gone bust. So i drove to the next store, empty. No motorcycles to look at, so went to the local bargain centre that's been there forever - gone broke. It was an ominous feel, also noticed lots of vacant shops. Sure, motorcycles are discretionary, but to me it's an early warning sign that tradies (and others) are not buying their toys any more. Then i spoke to another guy selling motorcycle accessories, said it's the worst market he has seen for 30 years. All that money printing is not making it into the real economy.

The repercussions of the GFC are only just hitting Oz. We were shielded by all the mining investment and the "we are different, all is well" mentality. Compounding everything are policy decision made by governments long ago without foresight.

 

[Tyler Durden]

Thing is, those same authors are nowhere to be seen now. I reckon if there are a few more down days, then the mainstream media will jump onto the bear bandwagon and claim the rest of the year will be a bear market.

 

[young-gun]

I tend to agree. Funny, i went to visit my local motorcycle store yesterday only to see a big fence surrounding it, - gone bust. So i drove to the next store, empty. No motorcycles to look at, so went to the local bargain centre that's been there forever - gone broke. It was an ominous feel, also noticed lots of vacant shops. Sure, motorcycles are discretionary, but to me it's an early warning sign that tradies (and others) are not buying their toys any more. Then i spoke to another guy selling motorcycle accessories, said it's the worst market he has seen for 30 years. All that money printing is not making it into the real economy.

Hopefully it drives second hand prices a little lower, I'm dying to get back on a bike, just got better places to put money atm unfortunately.

Re. tradies, construction is definitely slowing. I've been going from high rise to high rise no problem for the past 6 years. Looks like this may be my last one for a while, buildings just arent going up, big or small, I'm sure they will be looking at knocking off some dead wood soon.

 

[Tyler Durden]

We've just entered May, and the market seems to be holding up. Perhaps I am wrong and there won't be the annual fire sale in May?

 

[Smurf1976]

We've just entered May, and the market seems to be holding up.

The index might be holding up but a lot if individual stocks aren't.

Of those I'm watching, HHL, MAH and GRR were all down 6+% today alone and no doubt there are many more.

As for the "real" economy, a friend recently mentioned that his son and three of his friends are all looking to leave the state (Tasmania) moving to Queensland to get work. It's about as dead as it can get down here - the best he can get is a manual labouring job working on the NBN and he's been offered an apprenticeship in Qld. So a big regional difference there.

On the plus side, it's become very easy for me to get various contractors to do even the smallest jobs. Only this week, someone spent a lot of time to look at and quote on a job that would take less time to actually do than they spent quoting on it (and no, I didn't pay a cent up front for the quote). A few years ago they wouldn't have bothered to turn up. That says it all really. There's not much work out there, or at least not enough to keep everyone busy.

 

[ROE]

Thing is, those same authors are nowhere to be seen now. I reckon if there are a few more down days, then the mainstream media will jump onto the bear bandwagon and claim the rest of the year will be a bear market.

Here something you can keep an eye on ... stock market up 1% or 2% ...a few headlines about it going up...

stock market down 1-2% ...you get the translation to massive headlines of 13 Billion got wiped off the market today, shock horror Oh no.. and they have a whole page live feed it every 15 minutes and list which stock got hammer

Fear sell I love it , no better time to buy than when Fear took hold ...

 

[Tyler Durden]

As for the "real" economy, a friend recently mentioned that his son and three of his friends are all looking to leave the state (Tasmania) moving to Queensland to get work. It's about as dead as it can get down here - the best he can get is a manual labouring job working on the NBN and he's been offered an apprenticeship in Qld. So a big regional difference there.

On the plus side, it's become very easy for me to get various contractors to do even the smallest jobs. Only this week, someone spent a lot of time to look at and quote on a job that would take less time to actually do than they spent quoting on it (and no, I didn't pay a cent up front for the quote). A few years ago they wouldn't have bothered to turn up. That says it all really. There's not much work out there, or at least not enough to keep everyone busy.

My views on the national and global economy haven't changed and are still bear-ish, but I just think somehow, some way, the ASX is defying all this.

But on your point, I thought it relevant to point out that when I left the office in the CBD today at 5pm, I saw a huge line at my usual bus stop which stretched for some distance. It was a Thursday night - late night shopping night - so why isn't everyone shopping? Why are they all going home at 5pm? Sure, it's possible they may have been going to shop at another suburb, so my premise is based on the assumption that people in the CBD will stay in the CBD for shopping on a Thursday night.

 

[sptrawler]

My views on the national and global economy haven't changed and are still bear-ish, but I just think somehow, some way, the ASX is defying all this.

But on your point, I thought it relevant to point out that when I left the office in the CBD today at 5pm, I saw a huge line at my usual bus stop which stretched for some distance. It was a Thursday night - late night shopping night - so why isn't everyone shopping? Why are they all going home at 5pm? Sure, it's possible they may have been going to shop at another suburb, so my premise is based on the assumption that people in the CBD will stay in the CBD for shopping on a Thursday night.

If commodity prices tank, we are in it to our armpits.
We should all start chanting god bless China.IMO
Gold is off the boil, nickel and copper are languishing, it's not good.

 

[chops_a_must]

Some might find this interesting:

http://quantifiableedges.blogspot.com.au/2013/05/what-happens-after-6-months-of-gains.html

 

[moXJO]

Is our market just viewed as safe by the foreign yield chasers?
Forward looking I'm not so sure business will be doing that well to justify the bull run, but maybe I'm just plain wrong.

 

[Klogg]

If commodity prices tank, we are in it to our armpits.
We should all start chanting god bless China.IMO
Gold is off the boil, nickel and copper are languishing, it's not good.

And now Iron Ore is taking a beating once more... Spot price was down almost 5% overnight.

Lets see how AGO/FMG open... (I generally track those as IO price proxies)

 

[chops_a_must]

The data continues to surprise to the upside.

The market is leading the data, again.

Where is that floor trader fella?

 

[G Gekko]

I can't help but feel that a change in government will turn a corner in investor & consumer confidence. I'm not trying to be political, but a Coalition government will bring back memories of everyone making cash easily. The economy was riding high, the sharemarket high, and property was booming. Not that all economic indicators will go back to how they once were but it may cause people to feel a little more optimistic.