It was Feb. '09 when I first highlighted the rise in the Baltic Dry Index as a "green shoot" that augured for a global recovery, and I remarked last May that the dramatic rise in the Baltic was "very bullish." I found this chart quite interesting, since it illustrates how the Baltic has indeed been an excellent indicator of the recovery in equity prices worldwide. Usually it is a coincident indicator, but for most of last year it was a leading indicator, probably because the market was so pessimistic that it was reluctant to pay attention to any positive signs.
Scott,
ReplyDeleteDo you think Baltic recovery could simply be a blip from record low inventory levels?
What are your thoughts about the significance of the marginal consecutive declines of the housing index?....we could chalk Feb up to the snow, but that wouldn't be the case for Jan or Dec......
As you know anything below 50 is NEGATIVE, and now at 15, we are much closer to zero than a neutral 50.
The Baltic recovery has been with us for over a year now. I don't think it's a blip. Housing is still weak, no question. But the evidence suggest we have probably seen the bottom, and certainly the worst of the decline.
ReplyDeleteScott,
ReplyDeleteI was focusing on the fact that the Baltic index started a marginal decline in November and really only recently blipped up.
Based on my channel checks, it appears that traffic may be slowing again following a recent inventory build.
I guess we will have to see whether the downward marginal trend resumes in upcoming months.
I would agree with Scott.
ReplyDeleteI follow the shippers pretty extensively in the tanker market (VLCC's, Afram, Suezmax, etc), and the thing that is most impressive about the Baltic at the current time ... is that this increase in demand for ships comes at a time when the industry has an insane amount of vessels.
That's really what the Batlic follows is not the amount being shipped, but the demand for shipping.
This increase in demand, despite the record number of supply of vessels out there is what I find most interesting ...
Dan
But many of those vessals are parked idle right now....
ReplyDeletehttp://globaleconomicanalysis.blogspot.com/2009/09/ghost-fleets-and-protectionism.html
A contracting supply of ships could explain the temporary recent rise following the decline since November....again only time will tell.
Airelon: Thanks for your comment.
ReplyDelete