Saturday, January 21, 2012

Baltic Dry Index Plunging to Near Historic Lows

In late 2008 and early 2009, the Baltic Dry Index (which is essentially an index of the global bulk shipping rate) plunged from 12,000 to roughly 600.  The BDI lows approximately coincided with the announcement of QE1, which saw the index rebound to nearly 5,000 by late 2009.  The index has been in a clear downtrend ever since.  After bouncing off of the top of the down channel near 2,150 in early October, the Baltic Dry Index has again fallen off a cliff, collapsing an astounding 55% in the past 3 weeks, and is now approaching all-time lows.
The index made a weekly close of 862, a 52-week low, down 31 points or 3.5% on the day Friday. 
Clearly, global trade is collapsing as evidenced by the near historic lows being placed by the BDI.
If the Fed disappoints next week and fails to officially announce QE3, look for the BDI to plunge further to all-time lows.
So much for those green shoots. 

Baltic Exchange Dry Index (BDI)
& Gold (gold)
"Logarithmic Graph"

Baltic Exchange Dry Index (BDI)Recent,
20 day exponential average in red.

Charts courtesy Investment