Wednesday, May 20, 2009

Baltic update--very bullish


I first highlighted the Baltic shipping rate indices in early February, arguing that they were an early sign of a global recovery. That shipping rates continue to firm—the Baltic Dry Index has quadrupled since its low of last November—is an excellent sign that the global economy is on the mend. This is a green shoot that is very hard for the bears to ignore.

2 comments:

Bernard said...

If it's a result of China taking the opp to stockpile commodities, is that bullish for the Global economy?

Scott Grannis said...

Lots of people have noted that China is likely playing a big role here, but I would note that there are so many diverse signs of improvement in the global economy that China can't be the sole driver. Virtually all industrial commodities are rising in price, oil prices are rising, home builders' stocks are rising, and equity markets everywhere are rising (particularly emerging markets).

I recall the old saying "what's good for GM is good for the country." Today we might say that "what's good for China is good for the global economy." China is undoubtedly going to be growing significantly for years to come, and that means they are going to be buying lots of things from all over the world, and selling lots of things all over the world. World living standards are going to rise, and China will be accounting for an increasing increment of that improvement. Nothing wrong or sinister about that, is there?