Tuesday, November 17, 2009

Baltic Dry Index Roars Back: 102.5% Gain in 39 Days

The Baltic Dry Index closed today at 4381, advancing for the 14th straight day, and registering positive gains in 31 out of the last 35 days. From the late-September low of 2163, the benchmark index for freight costs to ship dry bulk commodities such as iron ore, coal and grains has more than doubled in just 39 days, and has reached the highest level since September 24, 2008, almost 14 months ago. The global economic recovery is underway and gaining momentum.

See related post here from Scott Grannis, who says that:

Clearly, the wheels of global commerce are spinning back up. Everything I see is consistent with a global recovery in confidence, in demand, and in production.


At 11/18/2009 5:09 AM, Blogger BxCapricorn said...

Seasonal coal shipments. Happens every year. If you look at DRYS, EXM, and other shippers during this period, they haven't moved much. If you step back and look at the BDI over a few years, it makes more sense.

Next, you'll show rice prices going higher, claiming that's some kind of global growth indicator, vice the result of multiple typhoon hits on the Philippines. First time in 20 years that PI is a net importer. Potash stock is at 110 right now. Watch that implode soon, as it is another global growth head-fake, pump-and-dump, courtesy of Wall Street's fleece machine.

At 11/18/2009 12:23 PM, Anonymous Leonid said...

Everything you and Grannis see points to recovery except the things you refuse to see, like the drop in the BDI you ignored from May through October with no explanation.

At 11/18/2009 2:20 PM, Anonymous Benny Die Recession said...

Die, recession, die, die, die!

At 11/18/2009 5:53 PM, Anonymous feeblemind said...

Meanwhile, rail car loadings were down about 15% from a year earlier and another 6500 jobs were lost in the trucking industry last month.

At 11/19/2009 5:03 AM, Blogger juandos said...

"Everything you and Grannis see points to recovery except the things you refuse to see, like the drop in the BDI you ignored from May through October with no explanation"...

Hmmm, interesting point Leonid especially since I just got done reading this bit by Ambrose Pritchard in the UK Telegraph: Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction

At 11/20/2009 5:43 PM, Blogger juandos said...

Oh! Oh! Could there be some substance to this posting from Business Insider?

Freight Forwards Curve Warns Of Baltic Dry Index Collapse (EGLE, DRYS, GNK)

Yet while dry bulk stocks have rallied to some extent, they haven't experienced the same strength as they have in the past when the BDI was at such high levels.

For example, DryShips (DRYS), Eagle Bulk Shipping (EGLE), and Genco Shipping (GNK) are trading below their highs for this year, and dramatically lower to where they've been in the past when the BDI was above 4,600. The same is generally the case for dry bulk shipping companies in Asia. So what gives?

While forecasting the BDI is a bit of fool's game, the stocks haven't run like in the past due to concerns that we may be set up for a massive BDI head-fake in 2010. This is because that supply chart you see above isn't set to get any better. It is set to worsen.

At 11/20/2009 6:29 PM, Blogger BxCapricorn said...

Juandos is right, and that's because these companies, listening to the wrong economists, believed in the fantasy of "Global Growth" and leveraged to build more Supramax, Panamax, and other types of container ships. Every month, they have a slight bump when the bank "forgives" their loan for another month. These poor banks cannot afford to take possession of a ship, with no long term contract, the same way your community bank cannot take possession of every foreclosure.

Joseph Stiglitz is already inundating the media with his message to push another stimulus package. Why?


Worth reading. Eyes are better than graphs.


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