Tuesday, July 6, 2010

More Bearish Prognosis.

The shipping index has dropped 50%. What does it mean?

The Baltic Dry Index (BDI) measures the cost of shipping dry bulk goods – commodities such as iron ore and coal, for example. The BDI has fallen almost in half since the end of May, but let's put that in perspective. The index saw a 95% drop during the financial crisis of 2008. If the price of moving raw materials falls, that's because demand for finished goods is also slowing down. Company restocking is now ending, and we're waiting to see what sort of 'real' demand remains to pick up the slack once government stimulus is removed. Therefore, a drop in the BDI suggests that the global economy must be slowing down.

Posted by dan1 @ 12:38 PM (1507 views)
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4 thoughts on “More Bearish Prognosis.

  • 51ck-6-51x says:

    A: Take profits on your gold (and similar) positions.

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  • 666,
    Gold is down quite a bit today (back below that magic $1200 level). But why would a falling Baltic Dry Index lead to falls in the gold price?

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  • does it mean we’re buying less sh1t from China, that “communist” country that seems to be actually something
    rather different indeed.

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