Thursday, February 12, 2009

Global Economic Activity On the Rebound?

December trade data released yesterday showed continued outright declines in both imports and exports. That's old news, of course. We know that global economic activity almost ground to a halt in the last three months of 2008. Since then, it looks like activity is on the rebound, and the chart above is the best indicator I've seen of that. This measure of shipping costs has risen 337% from its early December low, and in percentage terms (i.e., using a log scale for the y-axis) has recovered about half of its losses.

This may be purely due to the Chinese making aggressive purchases of raw materials from other countries, but nevertheless it is a sign of a significant reversal of the weakness that prevailed late last year. Meanwhile, the more inclusive Baltic Dry Index is up 200% from its lows (see chart below). Fascinating!

~Scott Grannis


10 Comments:

At 2/12/2009 12:43 PM, Blogger QT said...

Shall we continue the eternal struggle between the polyannas and the eeyores? :D

 
At 2/12/2009 12:53 PM, Anonymous Anonymous said...

Chinese iron ore imports on the rebound?

 
At 2/12/2009 1:00 PM, Anonymous Norman said...

Yippie!!!!! Some one is using log scales.

 
At 2/12/2009 3:16 PM, Anonymous Anonymous said...

Washington - The ultimate contrary indicator

 
At 2/12/2009 4:45 PM, Blogger OBloodyHell said...

> Shall we continue the eternal struggle between the pollyannas and the eeyores? :D

Don't be silly. Bush is gone. The eeyores have all become pollyannas, now that The One is running things. Don't you realize, He Can Do No Wrong? Just ask Chris Matthews of HardOn.

> Yippie!!!!! Some one is using log scales.

And this is bad how for comparing current to typical performance?

 
At 2/12/2009 7:53 PM, Blogger marketdoc said...

Great illustration. I guess the ladies and gentlemen in Washington need to get their Stimulus Bill passed pronto before the economy turns up on its own.

 
At 2/13/2009 7:02 AM, Anonymous libtard said...

Wow, this is the most-leading one yet Dr.Perry. Gartman was on Kudrow last night and asked about this exact same thing. Its very easy to be up 50, 100, 200% when the index has completely crashed.

The index often moves in vertical bursts, and the magnitude of this move is not yet indicative of anything substantial. Throw out the log scale and look:

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

 
At 2/13/2009 2:15 PM, Anonymous Anonymous said...

For the past five years there has been an increase in the Baltic during the first quarter. Not sure why ... maybe a seasonal adjustment. It's following that trend.

However, it may increase this time because the Baltic has probably bottomed out.

 
At 2/14/2009 9:21 AM, Anonymous Anonymous said...

The BDI turned down recently:

http://www.bloomberg.com/apps/cbuilder?ticker1=BDIY%3AIND

 
At 3/28/2009 1:14 PM, Anonymous Anonymous said...

How about the March Baltic Dry Index chart? Not looking so "warm and fuzzy".

 

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