Skip to main content

What's the Baltic Dry Index telling us now?

Saw an interesting tweet from Maoxian over the weekend on the (extreme) inflationary signals that the Baltic Dry Index seems to be giving us.

Have a look at the chart in Maoxian's tweet. I wonder if any of us have ever seen such a devastating decline (-94% drop), followed by such an amazingly quick and robust (BDI is up 427% since its Dec. low) recovery move?

Regulars here at Finance Trends may recall our past discussions of the Baltic Dry Index and its increased use as a gauge of global economic activity. So what is the BDI be telling us now?

Our March 23rd post (previous BDI update) focused on the relationship between (then) recent moves in the price of copper vs. the Baltic Dry Index.

At that time, copper prices were steadily moving higher, despite analysts' claims that the move up was not supported by "real demand"; the move up was supposed to be driven more by a temporary restocking of strategic inventories by the Chinese. I wondered, at that time, if copper would soon run out of steam and follow the dip then underway in the BDI.

As it turns out, both copper and the Baltic Dry Index have continued to move higher since that time. Take a look at this updated chart (courtesy of InvestmentTools.com) below.

So what is the recent strength in Dr. Copper and the Baltic Dry Index telling us now?

Have, as Maoxian recently suggested, the central bankers let loose an inflationary tidal wave? Or are we also starting to see some pick up in base metals prices and dry bulk shipping activity as China's economy expands and the dollar declines?

Related articles and posts:

1. Copper jumps to 7 month high on dollar, China - Bloomberg.

2. Commodities on a record rebound - The Australian.

3. Dry bulk market smiling again - Helenic Shipping News.

4. Dr. Copper is in the news again - Finance Trends.

5. Commodity currencies: follow that ship! - Finance Trends.

Popular posts from this blog

Lessons from Hedge Fund Market Wizards: Scott Ramsey

Today we continue our series, "Lessons from Hedge Fund Market Wizards" , with a look at Jack Schwager's interview with Scott Ramsey of Denali Asset Management.  Ramsey, a futures trader and CTA who works on the island of St. Croix, spoke to Schwager about his first foray into the markets, his evolution as a trader, and the process he stands by to protect and grow his clients' money. 1) . Ramsey started trading in college. He was roped into the OTC metals market via a broker's ad in the Wall St. Journal. The broker charged customers a flat fee to buy and sell as much as they wanted in a particular market for six month. At the time, Scott was a novice and didn't know about futures, so he traded metals in this fashion through the inflationary run-up of the late 1970s. 2) . Scott had to rethink his trading strategy after he bought silver at $50 an oz., only to watch it collapse to $26 following a long string of limit-down days. He sold as soon as the market...

Finance Trends 2019 Mid-Year Markets Review

Email subscribers of the Finance Trends Newsletter receive the first look at new articles and market updates, such as the following piece, sent out to our email list on Sunday (6/14).   Hello and welcome, everyone! If you received our last email notice over the July 4th holiday, you'll know that this weekend's newsletter will serve as a mid-year market update and a follow-up to issue #29, " How to Reinvest in a Rising Market ".   Ladies and gentlemen, without further ado, let's start the show...  Finance Trends Newsletter: Our Mid-Year Market Review When we last spoke, back in February, the U.S. stock market was rallying off its December-January lows. As the S&P 500 and Nasdaq reclaimed their 200 day moving averages in February and March, it became increasingly apparent that a lot of retail investors (and perhaps some institutional investors) were left under-invested while watching this recovery move from the sidelines.  The U.S. stock ...

How to "Pull the Trigger" on Your Trading Ideas

In our last post, I quoted hedge fund manager, Jim Leitner on the importance of following up on your investment ideas.  Today I'd like to follow up and share some thoughts on how you can learn to consistently "pull the trigger" on your best trading setups and investing ideas. In order to help you do that, we'll take from the best and offer up key insights from interviews with top traders and trading psychologists like Alan Farley, Brett Steenbarger, and Doug Hirschhorn .  Now before we get to their key insights on overcoming trading anxiety and pulling the trigger on your trading ideas, let's remember what Jim Leitner said in his interview: "Learn to love to listen to people and when you hear something interesting, follow up on it. Don't just think, "Well that's an interesting idea" only to find out a year later that the company you could've bought shares in is now up 500-fold. You never want to say woulda, coulda, shoulda...