Skip to main content

What's the Baltic Dry Index telling us now?

Saw an interesting tweet from Maoxian over the weekend on the (extreme) inflationary signals that the Baltic Dry Index seems to be giving us.

Have a look at the chart in Maoxian's tweet. I wonder if any of us have ever seen such a devastating decline (-94% drop), followed by such an amazingly quick and robust (BDI is up 427% since its Dec. low) recovery move?

Regulars here at Finance Trends may recall our past discussions of the Baltic Dry Index and its increased use as a gauge of global economic activity. So what is the BDI be telling us now?

Our March 23rd post (previous BDI update) focused on the relationship between (then) recent moves in the price of copper vs. the Baltic Dry Index.

At that time, copper prices were steadily moving higher, despite analysts' claims that the move up was not supported by "real demand"; the move up was supposed to be driven more by a temporary restocking of strategic inventories by the Chinese. I wondered, at that time, if copper would soon run out of steam and follow the dip then underway in the BDI.

As it turns out, both copper and the Baltic Dry Index have continued to move higher since that time. Take a look at this updated chart (courtesy of InvestmentTools.com) below.

So what is the recent strength in Dr. Copper and the Baltic Dry Index telling us now?

Have, as Maoxian recently suggested, the central bankers let loose an inflationary tidal wave? Or are we also starting to see some pick up in base metals prices and dry bulk shipping activity as China's economy expands and the dollar declines?

Related articles and posts:

1. Copper jumps to 7 month high on dollar, China - Bloomberg.

2. Commodities on a record rebound - The Australian.

3. Dry bulk market smiling again - Helenic Shipping News.

4. Dr. Copper is in the news again - Finance Trends.

5. Commodity currencies: follow that ship! - Finance Trends.

Labels:

Popular posts from this blog

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4.
Read more

Moneyball: How the Red Sox Win Championships

Welcome, readers . T o get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter .   The Boston Red Sox won their fourth World Series title of t he 21st century this we ek. Having won their first Se ries in 86 years back in 200 4, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it? Quick background: in late 2002, team own er and hedge fund manager, John W. Henry (with his partners ) bought the Boston Red Sox and its historic Fenway Park for a reported sum of $ 695 million. Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship. This brings us to one of my fav orite scenes from the 2011 film , Moneyball , in which John W. Henry (played by Ar liss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pi
Read more

William O'Neil Interview: How to Buy Winning Stocks

Investor's B usiness Daily founder and veteran stock trader, William O'Neil share d his trading methods and insights on buying winning stocks in an in-depth IBD radio interview. Here are some highlights from William O'Neil's interview with IBD: William O'Neil's interest in the stock market began when he started working as a young adult.  "I say many times that I didn't get that much out of college. I didn't have much interest in the stock market until I graduated from college. When I got married, I had to look out into the future and get more serious. The investment world had some appeal and that's when I started studying it. I became a stock broker after I got out of the Air Force."    He moved to Los Angeles and started work in a stock broker's office with twenty other guys. When their phone leads from ads didn't pan out, O'Neil would take the leads and drive down to visit the prospective customers in person.
Read more