Baltic Dry Index
Ignore the spin and follow the main story:
"Rates for shipping iron ore, grain, coal and other commodities have fallen nearly 25% in the past six weeks, reflecting a slowdown in the movement of many raw materials around the globe.
While the slowdown reflects a softening of world economic growth, [ignore: the silver lining is lower transportation costs for a multitude of industries such as appliance makers, chemical producers and even bakeries, which use such materials in production processes].
Surging demand and a shortage of ships pushed freight rates to record highs in December. But since then, the Baltic Dry Index, the main indicator for commodity-freight rates, has fallen by more than half, with the slide accelerating in recent weeks. Industry officials point to a recent cutback in China's imports, particularly of iron ore used in steel production, as the driving force behind the precipitous decline. But the downturn has broader roots.
"The reason these prices are coming down is because world growth is slowing and U.S. growth is slowing," says Nariman Behravesh, chief economist at Global Insight, an economic forecasting and consulting firm in Lexington, Mass.
Growth is slowing globally. We see it in attenuating GDP data, as well as year over year changes in SPX profits.
Why people remain in some state of denial over this, I have no answer. Just accept what is instead of hoping for what migh be.
UPDATE June 15, 2005 10:01 pm
Dan Gross discussed the details of the BDI back in '03:
Commodity-Freight Rates Slip As Global Growth Slows Down
China's Cutback in Imports Plays Big Role in Decline; Shippers Await Better Prices
THE WALL STREET JOURNAL, June 13, 2005; Page A2
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when do u start to scale out of the market? back at the high end of the range, greenspan probly still raising rates (3.5-4.0%?), profits beggining to slow, higher dollar eating into profits, labor costs rising.
Posted by: scorpio | Jun 15, 2005 4:57:16 PM
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