The Baltic Dry Index is one of the only significant indexes of the ‘real’ economy, as it measures the transport of physical goods. While the US stock markets are near their all time highs, the shipment of real physical goods is down 35%, the worst start to the year in 30 years. From Zero Hedge:
When this indicator of global trade rises, everything is rosy and reams of asset-gatherers and talking-heads wil quote it as indicative of how great the world is. When it drops – silence. There’s always an excuse – over- or under-capacity, too many ships, too few ships, etc. However, the last 2 weeks have seen a 35% collapse in the cost to ship bulk. There is a relative seasonal pattern over the holiday period – with shipping costs rising into the holiday and falling after but… this is the biggest drop from a Christmas Eve since at least 1984, 30 years! Seems like the inventory stacking of Q4 had absolutely no follow-through whatsoever…
All thepost-Thanksgiving exuberance has been eviscerated from the Baltic Dry Index…
and some context – this is the worst post-holiday start to the year since at least 1984!!
From Wikipedia (definition):
The Baltic Dry Index (BDI) is a number (in USD) issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides “an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulkcarriers carrying a range of commodities including coal, iron ore and grain.”[1]
