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Baltic Dry Plunges 4.5%, At Lowest Level Since 2009

Submitted by Tyler Durden on 01/04/2011 09:46 -0400

When we noted last night that there was a Baltic fat finger index, we thought we were joking. Appears not. The BDIY has plunged by 4.5% overnight from 1,773 to 1,693, easily the biggest one day drop in a long time. And, more importantly, the index has just taken out the 2010 lows hit on July 15, when the BDIY last traded at 1,700. So in a normal world, one could argue, the fact that there no demand for shipping may actually indicate something. However, in this bizarro "5 year plan" politburo reality, this will likely result in futures once again surging as QE4.5 starts getting priced in.

Chart shows data as of most recent prior update.

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Tue, 01/04/2011 - 09:47 | 846224 docj

Who cares - CRIMEX managed another gorgeous news-free takedown of PMs (esp. Silver) this morning. Couple more of those and I can start adding to my pile again.

Tue, 01/04/2011 - 10:03 | 846253 MsCreant

The turd has said it typically happens at 8:30 am. This is a hell of a hit.

Tue, 01/04/2011 - 14:39 | 847063 Hephasteus

And we all know how it rolls. It sets up nasty retracements that go +66 percent. You're looking at 34 dollar silver next week possibly. Or at this rate of bullshit thursday.

Tue, 01/04/2011 - 10:13 | 846275 topcallingtroll

Silver bears are going to get you! Boogah Boogah! Get out of precious metals now before it is too late! (and give them to me please. I'm still mad I got out at an average of 24)

Tue, 01/04/2011 - 10:17 | 846283 docj

Silver bears...

It's CRIMEX time... in the City

I got nothing beyond that, unfortunately.

Tue, 01/04/2011 - 10:23 | 846292 NotApplicable

Ding-a-lings,
steal your bling.

Soon it will be Judgement Day.

Tue, 01/04/2011 - 10:27 | 846298 hedgeless_horseman

Very nice. The two of you should get a piano.

Tue, 01/04/2011 - 10:29 | 846304 MsCreant

Agreed. I'd buy the first round of drinks.

Tue, 01/04/2011 - 11:38 | 846502 Eternal Student

Second one's on me. There's some serious potential here.

Tue, 01/04/2011 - 12:42 | 846675 LiquidBrick

3rd round here - will bring the Petron - thanks for the laughs.

Tue, 01/04/2011 - 10:47 | 846353 swissinv

yep was eagerly waiting for the delayed COMEX christmas present

Tue, 01/04/2011 - 15:40 | 847272 RexZeedog

Pick my pockets

They are grabbing my cash

So I must no bend over

Or, they'll cram up my as*

Silver bears...

It's CRIMEX time... in the City

Tue, 01/04/2011 - 11:46 | 846521 tictawk

there is an old market saying "Never try to catch a falling Safe" and I might add, especially when it is full of silver and gold :-)

Tue, 01/04/2011 - 09:48 | 846229 Contura

Maybe more (new) ships = lower bdi ?

Tue, 01/04/2011 - 09:50 | 846230 themosmitsos

Plat Livny FTW

lool

Tue, 01/04/2011 - 09:51 | 846233 Sudden Debt

luckily the economy is improving...

Tue, 01/04/2011 - 09:52 | 846236 SheepDog-One

Futures seem to love it, rock on Fraudmerica.

Tue, 01/04/2011 - 09:54 | 846237 Oh regional Indian

This is the Oz effect. Commodity shipments off the cliff. And no quick recovery either. Both stocks and below-ground access effected. Open pits will be back on line sooner but what will they ship on? Rail and road will need recovery time.

Shock from down under. Please do not underestimate the impact.

Act of god here.

When BDI reaches three digits, exit, convert and pray ;-)

ORI

http://aadivaahan.wordpress.com/2010/12/31/a-big-part-of-what-this-here-...

Tue, 01/04/2011 - 10:13 | 846266 Dismal Scientist

Must be the prospect of losing the Ashes on home soil. God's chosen cricketers have dropped the ball...

Tue, 01/04/2011 - 10:22 | 846289 Oh regional Indian

Trippy comment. They have indeed, haven't they? A shadow of their former selves.
Of course, the game is rigged to the core.

ORI

Tue, 01/04/2011 - 10:25 | 846299 Dismal Scientist

24 years since the Aussies last surrendered down under. Thats gotta hurt. As for being rigged, am not so sure this is the case for the Ashes, even if it is for other series. Maybe its just England's turn to have a purple patch. Yes, I agree, its stretching the bounds of credulity, but as the Aussies say themselves, 'God loves a trier' ;-)

Tue, 01/04/2011 - 09:57 | 846241 virgilcaine

Virg said Commodities would get hit. See pm's.

Tue, 01/04/2011 - 09:58 | 846246 SheepDog-One

Dollar down, stocks up.

Tue, 01/04/2011 - 09:58 | 846242 daz

should oil price follow?

Tue, 01/04/2011 - 09:59 | 846244 Boilermaker

RALLY TIME!! I turned my baseball cap inside out!

Tue, 01/04/2011 - 09:58 | 846245 plocequ1

I hate Baltic dry. I prefer Paul Masson Merlot with my Spaghetti . Like the great Orson welles once said.. " We will sell no wine, Before its time"

Tue, 01/04/2011 - 10:00 | 846247 bob_dabolina

Oil and PM's appear to be having a slight sell off..

Tue, 01/04/2011 - 10:02 | 846249 ageofreason

Nothing to see here....move along...

Just go and buy more shares since Goldman said they want you to buy theirs.....

Tue, 01/04/2011 - 10:04 | 846255 Azannoth

Gold/Silver gote hammered too ;(

Tue, 01/04/2011 - 10:46 | 846343 blindfaith

does this mean it is time to buy real estate again??????

Tue, 01/04/2011 - 11:06 | 846399 Horatio Beanblower

Yes, especially in Ireland.

Tue, 01/04/2011 - 14:42 | 847074 Hephasteus

Sucker. I'm all in on the Greek bond market. Looks juicy.

Tue, 01/04/2011 - 10:03 | 846256 Winterland

I'm not sure this is a great indicator, it reached it's yearly highs in late May when the world was melting down and then did a sharp about face throughout June and July. I don't disagree that everything is F'ed, just don't think this is a great data point.

Tue, 01/04/2011 - 10:11 | 846264 topcallingtroll

stop it with this baltic stuff. You are scaring the troll. Double long etf's on margin are not for the faint of heart, but the troll is only human, well mostly!

Tue, 01/04/2011 - 10:13 | 846267 Sophist Economicus

Could have predicited this. We all know that Facebook is inversely correlated with the Baltic Index. Now, the Unemployment index is directly correlated with the Baltic Dry Index -- but we all know that this is inversely correlated with the DOW. The Dow is directly correlated with Facebook, which, by the way, is directly correlated with BOTH POMO and women's dress hemlines. Of course, I state the obvious when I remind us all that the Baltic Dry index is also inversely correlated with WTF calls from Obama to Bernanke - so, phones must be buzzing all over the Belt Way right now. But no matter, their payout is BOTH directly and indirectly correlated with the Baltic Dry Index, Unemployment, inflation or anything else. THe trick is to keep our eyes on the black market Lira to Mark exchange rate. When that moves in a tangental relationship to the Baltic Dry Index -- short the BeJesus out of the S&P and the CAC!!!! Remember, you heard it here first

Tue, 01/04/2011 - 10:17 | 846282 Oh regional Indian

Brilliant SE amigo!

ORI

Tue, 01/04/2011 - 10:17 | 846284 topcallingtroll

Wow. That's the most sensical thing I have heard from a financial commentator in a long time. So when the lira to mark ratio drops in conjunction with the baltic dry index then teotwawki is near. Otherwise it is smooth sailing!

Tue, 01/04/2011 - 11:42 | 846507 Green Leader

A web-bot type program can't figure that one out!

Tue, 01/04/2011 - 10:12 | 846271 fedspeak

It seems that the collapse in commodities may very well have started today Jan 4 as commodities across the spectrum are droping as the Eurodollar index moves up and the BDI hits new lows. Here is a 5 minute sldieshow of all the commodities and what seems to be (at least for the next 5 minutes) an across the board sell off in commodites..

http://chart.ly/lxuwush

Tue, 01/04/2011 - 11:09 | 846407 uranian

copper is up 0.5%, lead up 0.8%, nickel up 1.7%, zinc 1.8%. Meanwhile, gold and silver are down 2% each, and the dollar is flat. sensical indeed.

Tue, 01/04/2011 - 10:13 | 846272 nudedude

Completely irrelevant data.

Tue, 01/04/2011 - 12:36 | 846657 traderjoe

Yes, the price of shipping bulk raw materials is COMPLETELY IRRELEVANT - and has NOTHING to do with ANYTHING. No measure of the supply and demand for ships. No measure of the demand for raw materials. No measure of anything. Random. Completely random.

The index provides "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain."^[1]

Tue, 01/04/2011 - 14:21 | 847021 Lucius Corneliu...

Obvious precurser to a commodities route.

Tue, 01/04/2011 - 10:24 | 846273 virgilcaine

BDI leads on the Fundamental/Economic side and Silver leads the Mkts. Which ever way it goes Stocks will follow..eventually.

Mkts are doing a fireworks display on NY's eve. Soon to flame out.

Tue, 01/04/2011 - 10:27 | 846302 lamont cranston

The Harpex predicted this several months ago, dropping almost 14% between 10/1-12/1.

The Gonzalo Lira/Mark FX rate is inversely proportional to the quality of Chilean Malbec left in the bottle(s).

Tue, 01/04/2011 - 10:30 | 846305 nudedude

If it was the lowest since July 09, why didn't the market crash then, soon enough it'll be back up, after Christmas lull, yawn, next.

Tue, 01/04/2011 - 10:37 | 846321 blindfaith

this will add a big profit number to companies bottom line, not having to pay for shipping.

Tue, 01/04/2011 - 11:19 | 846443 assumptionblindness

Not having to pay for shipping = healthier bottom lines...certainly seems obvious. Maybe this will help the S&P companies to delay margin compression from increased commodity prices in Q4 '10 and Q1 '11.

The BDI collapse doesn't seem to make any sense though IF the export economies are doing as well as advertised (increasing exports) AND IF pricing power is healthy (due to high fuel and commodity prices).

Tue, 01/04/2011 - 14:46 | 847085 Lucius Corneliu...

< PCE < commodities < production < ISM < GDP

Less consumption drives commodities demand, not the other way around.

Tue, 01/04/2011 - 12:42 | 846676 HarryWanger

And that other indicator you loved to post when it was at "certain recession levels", the ECRI Leading Index is now positive at 2.2%. From a gloomy -11% in late July to positive 2.2%. I'm sure once the BDI starts to move up again, we'll never see it posted here again as well.

Tue, 01/04/2011 - 13:28 | 846855 Forgiven

Gee the drop in PM's would be interesting if there was a 'market' to speak of.

Baltic Dry Plunges 4.5%, At Lowest Level Since 2009

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