Handbasket Report — Baltic Dry Index 12/24

Oh, surprise, surprise. The Baldry is down again.

The archives here show the sinking of international trade, so this is just an update. Seeking Alpha has a good recap of what’s happened lately. Here’s the final paragraph:

A decrease in the demand for raw goods from China’s build out and exports from the United States’ weak dollar came to a halt. If this index begins to trend higher then this would be a good sign of economic recovery.

Here’s another article at Forbes.com: “Investing In Shipping At Low Tide”:

Oil is plumbing new depths close to $32 a barrel, the global economy is on its knees and freight rates have been plummeting over the past few months as a result. On Christmas Eve, the shipping industry’s benchmark Baltic Dry index posted its fifth consecutive drop, falling 1.3% to 774 points. Not a cheery market context for investors, but some are sniffing opportunity.

Opportunity, yes. Good opportunity, maybe? I hope so, but I couldn’t help but notice the plentitude of qualifiers in this commentary. “Good chance.” “If.” “Might.” “Could.” Absolutes are there, of course. My favorite is this line: “But if there is a recovery next year, shipping is sure to feel the benefit.” Now there’s an example of good safe writing.

But for me, the key point was this:

It is unlikely that there will be much joy for shipping bulls if the rest of the world economy does not perk up, with Asia a particularly important hotspot for the industry. How China fares will be crucial: the country’s recent slowdown has given many economists a fright, and the effectiveness of the government’s stimulus efforts will be under close inspection in the new year.

China again. So you are betting on China making a speedy recovery? How about US?

If you’re a visual type, click for a neat graph.

View the full BALDRY chart at Wikinvest

And, hey, have a Merry Christmas.



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