Posted on 05/25/2010 2:42:28 PM PDT by blam
Amid The Financial Turmoil, One Economic Indicator Is Soaring
Oilprice.com
May 25, 2010, 5:18 PM
The financial world is coming unglued again. Greece has pushed the E.U. to the brink. Global stock markets are tumbling.
And yet, at the same time at least one economic indicator is soaring. The Baltic Dry Index.
Today, the BDI jumped nearly 9%. The largest daily jump in at least the last six months.
In fact, the index is up 40% since the end of April. A jump that has roughly coincided with the recent decline in global stock markets.
The BDI tracks global shipping rates. A rising index generally means more trade, as goods are sailed around the world.
So what's going on? Are nations buying and selling more, even as the economy tailspins?
Digging a little deeper, the recent rise in the BDI is attributable mostly to a jump in rates for one particular ship type. Capesize.
Capesize vessels are amongst the largest in the world. Typically with capacity over 150,000 long tons of deadweight. (Back in the day, such ships were too large to sail through the Panama Canal. Therefore, they had to transit the Cape of Good Hope or Cape Horn. Thus the name.)
Interestingly, capesize vessels are the "weapon of choice" when it comes to transporting metal ores. This category also includes oil tankers.
Could the jump in Capesize rates be signaling more metals and oil floating globally? And if so, is this due to buyers hungry for product, or sellers desperate to unload?
This is a guest post by Dave Forest at oilprice.com
[snip]
(Excerpt) Read more at businessinsider.com ...
Everybody is preparing their stash?
now then, does this mean no more apocalyptic looking google-earth shots of all those stalled out vessels in whatever-that-place-is?
It's highs in 2007-2008 were in the 12,000 range.
Maybe the increase in cape size vessels is due to oil nearing $80 a barrel last month? Ore and metal trade is down.
Wouldn’t you imagine that the BDI would trail the financial markets by weeks or more - at least.
An intriguing factoid that tells us a whole lot of nothing. Who compiles all these numbers? Ask them.
It's my understanding that the BDI numbers are considered leading economic indicators.
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