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Baltic Dry Approaching Sea Level, Just Above 1 Year Lows

Tyler Durden's picture




 

The decoupling theorists are about to experience a second smackdown in 3 years. After the biggest bubble of 2008 blew up spectacularly and made beggars out of the Greek CEOs of various dry bulk shippers, only to see their fortunes go back to unchanged again, it looks like they may be retesting the benevolence of NetJets repo men for the second time. The BDIY chart has now completed a rather mutated head and shoulders, after dropping nearly two thousand points in the span of a month - the fastest plunge since the S&P 666 days.And with the Bank of China in liquidity salvage mode as reported earlier, look for much more gravity to come in this index.

 

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Fri, 07/02/2010 - 14:25 | 449635 Not A Pundit
Not A Pundit's picture

That's a sinking ship!

Sat, 07/03/2010 - 09:54 | 450653 hedgeless_horseman
hedgeless_horseman's picture

Factories near Dong Guan that formerly made premuims (Burger King meal toys) using cGMP for YUM now making MREs for chi.mil that will not be shipped to US in a container, but instead will arrive at their final destination in a chi.com ALICE pack on the back of an only son.

BDI doesn't track mil trans futures  If it did, I would be long and levered.

Fri, 07/02/2010 - 14:26 | 449636 dryam
dryam's picture

Does hard data even matter any more?

Fri, 07/02/2010 - 14:35 | 449667 carbonmutant
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"The reason for using the BDI is because it's one of the purest leading indicators of economic activity. It measures the demand to move raw materials which are the precursors to production. Consumer spending and other economic indicators are backward looking, meaning they examine what has already occurred. The BDI offers a real time glimpse at global raw material and infrastructure demand. And unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players."

http://www.wikinvest.com/stock/Baltic_Dry_Index_-_BDI_%28BALDRY%29

 

Fri, 07/02/2010 - 15:00 | 449731 Scooby Dooby Doo
Scooby Dooby Doo's picture

"It measures the demand to move raw materials"

Unless you use the ships as floating warehouses...

Any index can be manipulated.

Fri, 07/02/2010 - 15:04 | 449741 carbonmutant
carbonmutant's picture

Using them as warehouses doesn't seem to be doing much to prop up the rates...

Fri, 07/02/2010 - 17:13 | 450024 Kimo
Kimo's picture

Didn't china "invest" in building up stock piles of raw materials?  Misleading for production predictions.

Fri, 07/02/2010 - 15:16 | 449767 dryam
dryam's picture

My comment was sarcasm.

Fri, 07/02/2010 - 15:48 | 449836 carbonmutant
carbonmutant's picture

What with the fuzzy numbers coming out of places like the BLS I thought you had a point. Finding reliable indicators is a full time job.

Fri, 07/02/2010 - 14:26 | 449637 bugs_
bugs_'s picture

A buy at sea level?

Fri, 07/02/2010 - 22:55 | 450402 maddy10
maddy10's picture

Nowadays, all the action is 5 miles below sea level

Baltic dry is getting deep fried in oil now

 

Fri, 07/02/2010 - 14:29 | 449652 carbonmutant
carbonmutant's picture

It looks like it's dragging on the price of gold.

http://investmenttools.com/images/wfut/crb/bdi_gc.gif

 

Fri, 07/02/2010 - 14:34 | 449665 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Dragon?  Did someone say dragon?!  I'll show you dragon!  Check out my kung fu, dragon style! 

<Wapaw, wapow!!>

Fri, 07/02/2010 - 14:54 | 449719 Bonesetter Brown
Bonesetter Brown's picture

Ah -- your dragon style is no match for my tiger style my tiger technique has never been defeated!

<Thwap, pow!>

Fri, 07/02/2010 - 15:13 | 449757 cougar_w
cougar_w's picture

Your Kung Fu ...  is pig dung!

Now I must kill you so hard your ancestors will be dead.

<ching-a-ding, whap!>

Fri, 07/02/2010 - 19:10 | 450168 Dr. Sandi
Dr. Sandi's picture

Your Kung Fu ...  is pig dung!

Now I must kill you so hard your ancestors will be dead.

Yow! That line makes you my Short Term Personal Deity of the Afternoon!

 

Fri, 07/02/2010 - 14:33 | 449663 veritas seeker
veritas seeker's picture

Bloomberg...GM seeking 5 billion dollar credit line...

Fri, 07/02/2010 - 14:40 | 449679 jkruffin
jkruffin's picture

But, but, but....Didn't they claim they were paying all of TARP back and going to make major profits this year?  Now they want another credit line?  All this company did was shuffle money around to make it look like they paid back TARP.  They need to just bankrupt this company and Chrysler.  Who needs them?  We got plenty of cars and trucks to choose from, that don't end up in the shop every other month for repairs or recalls.

Fri, 07/02/2010 - 14:45 | 449693 glenlloyd
glenlloyd's picture

yeah, they said they were paying off their tarp loans, but what they failed to mention was that they were using money from another bailout bucket to pay them off.

it's all just one big tax payer funded circle jerk.

Fri, 07/02/2010 - 21:52 | 450349 mcguire
mcguire's picture

thats good... because since i found out 9/11 was an inside job and have completely gone off the deep end in terms of conspiracy theories, i havent been laid in a while... 

 

(actually, its the opposite... women seriously put out when they think /you/ think the world is coming to an end..)

Fri, 07/02/2010 - 15:31 | 449805 TheGoodDoctor
TheGoodDoctor's picture

What? Aren't they having a fucking IPO? Jesus Christ.

Fri, 07/02/2010 - 22:58 | 450405 maddy10
maddy10's picture

Obama for breakfast, lunch and dinner

That's what you ordered, eh?

Fri, 07/02/2010 - 14:40 | 449677 Attitude_Check
Attitude_Check's picture

Do you mean our "stimulus" just went overseas and "stimulated" the global economy (specifically the net exporting countries)?  And now that the sugar high is over and all the stimulus $'s have left the US we aren't buying as much -- REALLY?

Fri, 07/02/2010 - 14:45 | 449696 cougar_w
cougar_w's picture

Saying it like that, you make it sound like a bad thing.

Fri, 07/02/2010 - 14:45 | 449694 arm50
arm50's picture

off 26 days in a row

Fri, 07/02/2010 - 14:52 | 449714 EscapeKey
EscapeKey's picture

It's about time stimulus funds went towards supporting the Baltic Dry Index. Why don't we start by shipping all politicians to China?

 

Fri, 07/02/2010 - 14:57 | 449724 Gordon_Gekko
Gordon_Gekko's picture

And the banksters.

Fri, 07/02/2010 - 18:30 | 450114 Kayman
Kayman's picture

Come on guys- you know damned well the Chinese Communist Fascists won't take American politicians and banksters.

Fri, 07/02/2010 - 19:14 | 450171 Dr. Sandi
Dr. Sandi's picture

Come on guys- you know damned well the Chinese Communist Fascists won't take American politicians and banksters.

 

WTH? No, the Chinese will shoot ANYBODY. Seems like a good matchup.

We can fill some of the empty cargo containers with anybody who filed a nominating petition in any state or territory as well as all their major contributors.

The Chinese could do what we don't have the guts to do, and it would be a fundamentally better world.

Besides, it will help us reduce the awesome oversupply of empty cargo containers on this side of the Pacific.

 

 

Sat, 07/03/2010 - 01:20 | 450495 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

They LOVE Timmay in China.

Fri, 07/02/2010 - 15:05 | 449746 still kicking
still kicking's picture

Why subject China to that?  I prefer we ship them down about 4,000 feet into the GOM courtesy of some concrete shoes, who knows all the hot air coming out of their asses might be enough to equalize the force of oil and gas coming out of that blownout hole.  They might actually do some good for once, even if unintended.

Fri, 07/02/2010 - 15:48 | 449776 carbonmutant
carbonmutant's picture

I thought that the point of the whole salary cap thing was to make all that the bank talent go somewhere else...

Fri, 07/02/2010 - 18:34 | 450120 Kayman
Kayman's picture

Come on Carby

Did anyone buy into that infantile headfake "that the money cartel would lose its best talent"?  

Well maybe  Nigeria.... Yeah Nigeria could use some polish in their thieving...

Fri, 07/02/2010 - 17:04 | 450004 New_Meat
New_Meat's picture

You't have to use the Baltic Slimy Index for that - Ned

Fri, 07/02/2010 - 14:52 | 449711 gringo28
gringo28's picture

how is this not cyclical?

Fri, 07/02/2010 - 15:41 | 449825 buzzsaw99
buzzsaw99's picture

I agree, it will pick up toward the end of the year. This is the new normal.

Fri, 07/02/2010 - 14:52 | 449712 LoneStarHog
LoneStarHog's picture

It appears that good ol' Leo just got another DRY one!

Fri, 07/02/2010 - 14:54 | 449716 Gordon_Gekko
Gordon_Gekko's picture

It's about time for the cancerous tumor (that the world economy is today) to explode.

Fri, 07/02/2010 - 22:17 | 450371 Oh regional Indian
Oh regional Indian's picture

Exactly GG. And it will do so, from with-in.

On the other hand, who or what will give shape to the fall-out?

Are we really ready for anarchy/self-governance/communal living?

I'm afraid not. So, a lot us will also explode along with this cancer.

That is everyone's secret fear. Fear of the unknown.

What's that saying... better a known devil...

Food for thought.

 

ORI

http://aadivaahan.wordpress.com

Fri, 07/02/2010 - 14:56 | 449718 cougar_w
cougar_w's picture

You know what this means; Somali pirates have hit hard times.

Next up; IMF "representative" drops by to help them "restructure" their piracy trade to better leverage their existing hostage base for greater returns on captivity, thereby creating a longer runway so they can endure the downturn in pillage until things improve.

Though GS will somehow manage to short them, blow them up, and then collect their assets at $.05 on the dollar, becoming in the process actual rather than merely figurative pirates.

Which of course makes the entire exercise extremely entertaining. And we are all about entertainment.

Fri, 07/02/2010 - 15:05 | 449735 Ragnarok
Ragnarok's picture

Somali pirates have hit hard times

 

We'll know things get really bad when we start seeing Somali Pirate telethons:

"For just pennies a day, about as much as you spend on a cup of coffee..."

Fri, 07/02/2010 - 15:33 | 449809 TheGoodDoctor
TheGoodDoctor's picture

And by supporting the pirates you will provide them with what they need for their jobs. AK-47's. :)

Fri, 07/02/2010 - 15:38 | 449822 cougar_w
cougar_w's picture

All they need is one merchant vessel a week to feed a gang of 14 blood-thirsty cutthroats. Is that so much to ask? It's an ancient way of life, that will vanish forever if we don't save the pirates of Somalia. Give generously today.

Fri, 07/02/2010 - 19:15 | 450172 Dr. Sandi
Dr. Sandi's picture

Problem is that most of the money raised just comes back here anyway.

 

Mon, 07/05/2010 - 07:44 | 452816 Hephasteus
Hephasteus's picture

Problem is most of the money raised would never get paid. The cristian funds got thrown to the wolves but meanwhile mrs obama is asking for money for haiti while they have gotten only 2 percent of the cash so far. Just like the CIA raises money from muslims in new york through charity redirecting the coffer flows, while bernie fleeces the jews. Once the beautiful ocean front places get turned into a corpse pile and just like katrina nobody from the government comes to help... Well the whole benefiting humanity and caring facade will burn.

Sun, 07/11/2010 - 06:16 | 462876 Dr. Sandi
Dr. Sandi's picture

Let's face it. If we actually gave half a rat's ass about the suffering in Haiti, we'd have stopped screwing them several decades ago.

Instead, we turn the screws tighter by destroying their meagre agricultural economy by subsidizing the U.S. competition. They get higher prices and a chance to starve a little faster, and our agrobiz thieves get another fraction of a percentage on their bottom line.

Yeah, we're a real heroic people.

Fri, 07/02/2010 - 15:53 | 449843 Attitude_Check
Attitude_Check's picture

Back in 1807!!! when the Barbary coast pirates in North Africa were operating, and Europe was just paying them off, we sent in the marines and ENDED it (hence to origin of the US Marine song "From the Halls of Montezuma to the shores of TRIPOLLI".  Why we now don't just sink the mother ships when they come out (I'm SURE we know when the sail) I can't even fathom.

Fri, 07/02/2010 - 17:13 | 450023 New_Meat
New_Meat's picture

A_C--O would have another s**t hemorhage, like he did after the Seals offed the three teenaged community organizers.  These are MOTHER ships, no one could attack a mutha!  Maybe Enterprise Group (BOHICA, Our Screws Never Stop) will kinda sweep through the area and "perceive a threat".

- Ned

(negative attitude check: no place sucks like this place sucks)

Sat, 07/03/2010 - 01:29 | 450504 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Why we now don't just sink the mother ships when they come out (I'm SURE we know when the sail) I can't even fathom.

Maybe "Somali Pirates" is a bullshit story (in this era)...Think about it.

Fri, 07/02/2010 - 14:59 | 449730 Sancho Ponzi
Sancho Ponzi's picture

Here's an insightful shipping summary from Cotzias:

http://cotzias.gr/reports/weekly/Cotzias_2010_Week_24_Report_18_Jun_10.pdf

Fri, 07/02/2010 - 15:22 | 449780 carbonmutant
carbonmutant's picture

Great report.

Fri, 07/02/2010 - 23:44 | 450435 drwells
drwells's picture

Thanks Sancho, good reading.

Fri, 07/02/2010 - 15:12 | 449753 Scooby Dooby Doo
Scooby Dooby Doo's picture

Off topic but funny.

Gov. Arnold Schwarzenegger on Thursday ordered about 200,000 state workers to be paid the federal minimum wage this month because the state Legislature has not passed a budget, but the state controller is refusing to comply.

http://news.yahoo.com/s/ap/20100702/ap_on_bi_ge/us_california_budget_min...

$7.25 / hour bitches coming to a .gov worker near you.

Fri, 07/02/2010 - 15:16 | 449766 Ragnarok
Ragnarok's picture

Give'm Hell Arnie!

Fri, 07/02/2010 - 15:21 | 449778 cougar_w
cougar_w's picture

Kabuki theater meets the Special Olympics; double-retarded.

Cali is soooooo dead.

Fri, 07/02/2010 - 17:07 | 450010 Lux Fiat
Lux Fiat's picture

Forget $7.25 - still way to expensive.  I'm thinking $0 / hour.  Don't believe that the governator needs Chiang's approval for that.

Come on Arnie!  Don't be a girlie mahnn - do you're best take on the Donald's famous one liner.

Sat, 07/03/2010 - 01:31 | 450507 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Minimum Bitchez!!!

Tue, 07/06/2010 - 01:33 | 453895 Quantum Nucleonics
Quantum Nucleonics's picture

The best part is that it will really fuck up someone's pension formula if they are trying to retire this year.  Sorry, no $200K pension for you.

Fri, 07/02/2010 - 15:13 | 449756 HelluvaEngineer
HelluvaEngineer's picture

here comes the ramp job!

Fri, 07/02/2010 - 15:34 | 449813 carbonmutant
carbonmutant's picture

Algos sneaking Salley through the alley...

Fri, 07/02/2010 - 15:16 | 449763 Internet Tough Guy
Internet Tough Guy's picture

The machines woke up at 3pm.

Fri, 07/02/2010 - 15:25 | 449772 HelluvaEngineer
HelluvaEngineer's picture

It's a tribute to democracy.  "The short sellers hate our freedom."

ZH, let's all celebrate the 4th by enumerating the freedoms that we enjoy.

Fri, 07/02/2010 - 15:35 | 449816 Ragnarok
Ragnarok's picture

"Everybody's working for the weekend"

 

http://www.youtube.com/watch?v=rutArtds6r8

Fri, 07/02/2010 - 15:33 | 449810 ozziindaus
ozziindaus's picture

Someone mentioned in another article that the BDIY is no longer reliable or comparable to historic data because the amount of ships has changed (assumed reduced). Does this really matter since it's based on shipping rates? Is it analogous to airline ticket prices being raised due to less aircrafts flying? 

Fri, 07/02/2010 - 17:40 | 450063 traderjoe
traderjoe's picture

I actually think that fact (more ships/capacity) makes this index analogous to what's happening throughout the economy - too many ships were purchased with too much debt in 2005-2007 based upon a level of economic activity that turns out was not sustainable. Now, lower activity and higher capacity exist throughout the economy and as the recession intensifies, prices will decline further as providers simply want to cover their variable costs. To much capacity chasing not enough demand will bring us to the inevitable deflationary spiral that needs to happen to purge the system of all of the bad debt.

Fri, 07/02/2010 - 18:49 | 450143 ozziindaus
Fri, 07/02/2010 - 15:44 | 449831 Cyan Lite
Cyan Lite's picture

I'm actually toe-dipping in some of the Greek shippers, Excel Maritime (EXM) especially.  I mean the stock is down from all-time highs of $85 down to sub-$5 levels.  Long-term buy and hold in anticipation of QE 2.0

I'm as cynical and bearish as the rest of you, but the real money will be made when Ben ramps back up the printing press.  Those short will get squeezed, and the toe-dippers will be rewarded handsomely.  See March 2009 for proof.

Fri, 07/02/2010 - 15:58 | 449853 Attitude_Check
Attitude_Check's picture

Reasonably high risk, but potential very high reward.  It just makes me sick to put money into the machine though!

Fri, 07/02/2010 - 19:19 | 450175 DoctoRx
DoctoRx's picture

Several months ago I read an informed analysis of the BDI that said that based on known deliveries of new capacity, a 2000 BDI was expected.  Whether this is ahead of schedule, I can't remember and don't have that writeup handy.  If it gets to 1500 or below, I am certain that was not on that author's radar screen.

Sun, 07/04/2010 - 13:19 | 451782 proLiberty
proLiberty's picture

In central Missouri, there is an Amish settlement where outside income is earned by running small sawmills.  The logs come from immense oak, hickory and sycamore trees.  I visit one in order to buy scrap pieces by the pickup load to use for winter heating.  Their rough cut lumber normally goes to make railroad ties and pallets.  So this is another basic indicator of economic activity in the midwest.  In my conversations with the sawyer, I asked him how business was.  He told me that he didn't have any work from November through April, but now they have work making wood that is used to ship refrigeration equipment.

 Other mills in the area don't seem very busy, judging from the size of their scrap piles.  Fresh scrap is clearly a lighter color than old scrap.  Scrap piles are not too big and there aren't many new fresh logs in the pile waiting for the saw.

 

 

Sat, 08/21/2010 - 10:54 | 534647 herry
herry's picture

Certainly a lot of details like that to take into consideration. Thanks windows vps | cheap vps | cheap hosting | forex vps

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