Tuesday, June 02, 2009

Baltic Dry Index Advances 24 Straight Days in a Row, Rises Today By 11.5%, A 425 Point Gain

From last Wednesday:

BLOOMBERG -- The Baltic Dry Index, a measure of shipping costs for commodities, surpassed 3,000 points for the first time since October, buoyed by Chinese demand for iron ore. The index tracking transport costs on international trade routes rose 222 points, or 7.6%, to 3,164 points, according to the Baltic Exchange today. The measure posted an 18th straight gain, its longest advance in two years.

Such is demand that shippers “are almost pleading” to hire vessels, Stuart Rae, co-managing director of M2M Management Ltd., a hedge fund group that trades freight derivatives and operates carriers, said by phone today. The rally “is being driven by iron ore, by congestion in China, and by a lack” of ships available for hire in the Atlantic.

MP: Less than a week later, the Baltic Dry Index rose above 4,000 today for the first time since September 2008 (see chart above), and it has now posted its 24th consecutive daily gain. Today's 425 point gain represents a 11.5% one-day increase.


At 6/02/2009 9:46 PM, Anonymous Anonymous said...

Good sign, I have a question about it though, does this somewhat follow the price of energy? If energy rises in price wouldn't that impact the cost of transportation, I know that the supply of these shipping vessels is extremely inelastic and they will always want to be moving if they can cover their variable costs, but if the price of fuel rises that would affect their variable cost. I hope that this isn't a huge factor in it and this is a sign of recovery, but you never know.

At 6/03/2009 12:54 AM, Anonymous Anonymous said...

This morning's headlines are all pointing to economic stabilization and/recovery:

"Asian Stocks Near 8-Month Highs"

"Japan’s Nikkei Heads to 6th-Straight Gain"

"BOJ’s Kamezaki Says Economy Is No Longer in Freefall"

"Australia Unexpectedly Grows 0.4%, Skirting Global Recession"

"U.S. Service Industries Probably Shrank at Slower Pace in May"

At 6/03/2009 7:30 AM, Anonymous Eric Tyson said...

Nouriel Roubini is wrong again...he said in recent months that the stock market rally was simply a small, sucker's rally and that the economy would be horrible for all of 2009 and possibly into 2010 and he predicted oil would stay below $40 per barrel for all of 2009.

Wrong, wrong, wrong!

At 6/03/2009 12:07 PM, Anonymous Anonymous said...

You are suckers of mustard seeds. The BDI is a measure of shipping rates not volume. Volumes are still low, shipping rates have gone up. Guess what? Inflation.

Shipping companies have parked their ships in hopes of increasing rates. Kinda like oil.

At 6/03/2009 4:52 PM, Blogger Methinks said...

Eric Tyson,

You should be aware of a couple of things before you start doing the happy dance.

First, in the 90's, during Japan's lost decade, the Nikkei would rally 40% or so for several months on bad but not as bad as expected economic reports. Then, it would slide all the way back down. Rinse and repeat.

Second, the dollar is sinking. The S&P could rally to 500,000 and if the dollar is worthless, you're not better off. The Fed has been printing money like there's no tomorrow.

At 6/03/2009 4:54 PM, Blogger Methinks said...

"The BDI is a measure of shipping rates not volume. Volumes are still low, shipping rates have gone up. Guess what? Inflation."

Thank you. I was wondering about that. It's as useless as the ISE manufacturing index for that reason. The index came in a touch better than expected but the prices paid were WAY higher.

At 6/04/2009 8:14 AM, Anonymous Ryan J. said...


And how many billions of dollars are you managing? And what is your track record? You're probably still living with your parents!

You don't know what you're talking about. Tyson's web site actually has an excellent article explaining what happened in Japan in the 1990s and why there are almost no parallels with current U.S. situation.

Also, your choice of the S&P going to 50,000 shows your mindless repeating drivel from Jim Rogers. The least you go could do is cite your crappy, misinformed source.

At 6/05/2009 4:17 AM, Anonymous Anonymous said...

The economy sucks, the powers that be haven't addressed the crooks, and we're now in DEBT up to are ASSES...but, the BALTIC IS UP!!!!


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