Baltic Dry index.... DEEEED

mbga9pgf

http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Ouch! Isnt this supposed to be a leading indicator of global trade?

Looks pretty much F*cked to me.

Funny how a lot of people about a year ago commented that "ooh, its recovered".

I wonder if they do options out to 2020. Might buy into a few if they do; There is only one way this index can go once the recovery sets in. Unfortunately, I dont think a global recovery is anywhere this side of 2014.

Anyone know why the BDI is so poor at the mo?

Generali?

Edit:

For old times sake, here are a few articles on my old mate, the Option ARM:

http://online.wsj.com/article/BT-CO-20101214-712874.html

And a nice picture:



Hate to say "I told you so"....

But I told you so.

No recovery, as I predicted.

PasturesNew

Ah, very nice ... now, !!!!!! is it??

PasturesNew

http://en.wikipedia.org/wiki/Baltic_Dry_Index

Generali

Put simply, the Baltic Dry Index is an estimate of the price of shipping cargo by boat using grain and things like coal as a proxy for all shipping costs.

I don't really know why it has dropped down again. Major flooding in Queensland probably isn't helping because that will be stopping a lot of mined and agricultural products from getting out to port and so onto ships (eg link - capesize that are mentioned in the article make up over half the ships used for making up BDIY). Same goes for very bad weather in North America and Europe keeping shoppers at home perhaps...? Fewer shoppers => fewer goods sold => less being shipped (the latter is probably less likely as retail numbers seem strongish in the US).

It is a particularly volatile index and does seem to be within the range of the past couple of years or so, albeit towards the bottom.

System

mbga9pgf wrote: »

Hate to say "I told you so"....

But I told you so.

Except... you didn't. I don't recall a thread entitled "option ARM default to increase slightly. What we had were the usual moronic drivel along the lines of "armageddon", "timebomb" and

50% of these loans are expected to default. I suggest this is optomistic at best, especially as 70% of homeowners with these loans are faced with over 100% increase in mortgage payments.

Its going to be huge.

Yep massive...

Actually, it's only when I read back the first page of that thread that a realise what an odious little pleb you were, funny how buying a house changes people, and their predictions funnily enough.

https://forums.moneysavingexpert.com/discussion/1692639

StevieJ

mbga9pgf wrote: »

http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Ouch! Isnt this supposed to be a leading indicator of global trade?

.

Apparently not always Here is an article from the time when you said everyone was jumping on the bandwagon.

So is the BDI a leading or lagging indicator? Unfortunately, the answer seems to be: It depends.
Let's take the long view:

Is the BDI still relevant as an economic indicator? I guess the answer is: BDI works when looking at long-term trends and strategy. But for current trends, other factors are more relevant.
So for investors looking for a crystal ball in the BDI, be careful: It's cracked.

"If we look back in the spring," Hickey says. "The index peaked about March 9 - right when the equity market bottomed - and declined through mid-April. The strongest part of the equity rally happened at the same time the Baltic Dry Index was declining."
Not exactly what conventional wisdom would lead you to expect, if you thought the BDI was a true crystal ball.
The picture looks similar when you compare the index with various commodity indices:

http://74.205.65.105/features-and-interviews/1724-rethinking-the-baltic-dry.html

Degenerate

It's an index of the price of shipping stuff. Therefore, it's as likely to be affected by the supply of ships as the demand generated by trade levels. The lead time on ships is long, and a lot that were ordered in the boom are being delivered this year into a market where they are surplus to requirements.

StevieJ

Degenerate wrote: »

It's an index of the price of shipping stuff. Therefore, it's as likely to be affected by the supply of ships as the demand generated by trade levels. The lead time on ships is long, and a lot that were ordered in the boom are being delivered this year into a market where they are surplus to requirements.

Also, due to the oil contango previously (long prices higher than short) tankers were being hired just to store oil, although oil is not measured in the Baltic it shows an example of how the index can be distorted.

Generali

Degenerate wrote: »

It's an index of the price of shipping stuff. Therefore, it's as likely to be affected by the supply of ships as the demand generated by trade levels. The lead time on ships is long, and a lot that were ordered in the boom are being delivered this year into a market where they are surplus to requirements.

It's also an index on supplying pretty specific stuff and lots of that comes out of an area of Australia that is currently under a lot of water.

eg Mackay:



Rockhampton:



Bundeburg:



I don't know how much coverage this is getting in the UK but one of the world's great mining and farming areas is under water.

There has been very little loss of life which I guess means it isn't an exciting story. They're a tough lot up there. Still crap at cricket though.

vivatifosi

The floods are getting a fair amount of news coverage here, but more as a human interest story than an economic one. I've only seen one story that spoke about the impact on the mining industry. My mum phoned my uncle in Qld who lives downriver from Bundaberg. She asked if he was going to move out if the floods come. He said hell no, and that's why people in Qld live in Queenslanders. You're right. They're a tough bunch up there, even if he's a pom.

StevieJ

vivatifosi wrote: »

The floods are getting a fair amount of news coverage here, but more as a human interest story than an economic one. I've only seen one story that spoke about the impact on the mining industry. My mum phoned my uncle in Qld who lives downriver from Bundaberg. She asked if he was going to move out if the floods come. He said hell no, and that's why people in Qld live in Queenslanders. You're right. They're a tough bunch up there, even if he's a pom.

The OZ stock market has been reflecting the problems.