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Baltic Dry Bear Market Index
As much as we loathe saying "we told you so" - especially when it relates to highlighting the fallacious bullshit of one James Cramer - the truth is that just 3 weeks ago we pointed out the fact that the Baltic Dry Index was being heralded as proof of China's (and therefore the world's great recovery) was a mistake. At the time, we noted the temporary nature of the move and now forward markets indicated it was not sustainable; and of course, were met with a chorus of deniers. Well, following a 4.4% decline today, the Baltic Dry Index has now plunged over 20% from its recent peak (and the more crucial Capesize container rates even more) as underlying demand simply cannot keep pace with the massive (overbuilt) ship glut that remains. Added to this is the apparent 'tightening' stance by the PBOC that we have been noting and we suspect, as we warned, the 2011 deja vus will be clear.
Chart: Bloomberg
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The index is still 'a bit' higher than 600 wouldn't you say!!! If you can't look at the 5 year chart and see a major breakout then you are blind.
Here:
http://www.balticexchange.com/
Read everything and you'll understand what you are looking at. And why it's a canary in a coalmine.
Fuck Cramer, and forget bulk, containers is where to look...
http://www.harperpetersen.com/harpex/harpexRH.csv;jsessionid=BF5E9C0EB09...
Continued thanks Jim Davis and Christian Mueller!
Thanks pal, I just logged in to say the exact same thing. HARPEX is not as influenced by ship (over)building.
I hate it when graph axis are left unlabeled simply because they assume everyone knows exactly what's being graphed. Is the Y axis US$? If so, aren't those prices as related to overcapacity due to overbuilding as the ship overbuilding reflected in the Baltic Dy Index?
Can we correlate this to China's economic woes?
I'm not a trader or chart person, but wondered how the BDI numbers reflect economic health directly.
DaddyO
Thanks, I found that very helpful.
@ CPL and HH
Do not despair. It will get worse eventually. What cannot be sustained, wont
I'm looking at a 5 year chart right now... what is the breakout that you are suggesting? I must be blind.
5 years down until may 2013, then up and out of the wedge. Just my opinion. I have made no investments based on my opinion as most/all of the shipping companies will not survive anyway.
The doubling of the cape size rate in Sept.
Forces of evil in a bozo nightmare, Cramer is on TV with the phony index numbers. Cuz one is a weasel and the other is a nag, one is in a hole shove the other in a bag. With the rerun collapse and the cocaine nose job, the daytime crap of the presstitute's slot. He hung himself with a ticker tape string, ya slap the duck neck and it's hanging from a vulture wing. Ya can't bet if ya can't relate. Trade the cash for the debt for the lies and the hate. And our time is a piece of wax, that's fallen on the Cramer, who's chokin on his own words.
Little rewrite for the loser.
(thump) scratch (thump) scratch-scratch
...Soy un perdedor
I'm a loser baby, so why don't you kill me?
(Double-barrel buckshot)
Soy un perdidor
I'm a loser baby, so why don't you kill me?
The massive jump in August/ September this year was complete bullshit. Somebody was playing with the numbers.
Unless the ships were used to dump more unsold inventory into the Marianas Trench. Which may be the case, $1 billion worth of Surface RT tablets could fill up a lot of containers.
And your proof that someone was playing the #'s?
The only barometer to the economy that matters that continuously gets misrepresented and distorted by the powers that be.
To your health Baltic Dry.
I used to work on in the Baltic Exchange many years ago, and it was for gentlemen, 2 hour lunches everyday followed by a 30 min snooze in the Library.
But then one Friday night the IRA parked a van outside full of fertisler with a touch of semtex to get it going and blew the building to smithereens.
And thus, all gentlemen.
Capesize: an unlimited size cargo vessel, usually over 150,000 tons. Larger than Panamax or Suezmax vessels, these are the largest cargo ships afloat, and have to transit the Capes (Horn and Good Hope) to pass between oceans. These are bulk carriers, usually ore and other heavy materials, but not oil.
Perhaps in referring to the collapse of Capesize rates, the first "e" should be removed.
Why can't QE stimulate? Peak oil is deflationary, bitchez. Demand is down because debt loads are unsustainable, and moar debt cannot compensate for a plateau in energy production.
On another topic, intimately related but only by the interconnectedness of economics under the surface, I will have to pay out 7500 dollars a year for health insurance under Obamacare. Guess what? I DONT FUCKING HAVE THE MONEY. What to do? I'll sign up, pay the first premuim, (or the cheapest signup rate they allow) and then bag on the rest until next year, when I have to sign up again, only this time, I'll pick a different plan, and sign up with that. I'll do this each year until I've run through all the plans, or "they" recognize me for the deadbeat that I am, and freeze me out of the system. But at least I won't have to pay a penalty.
"Why can't QE stimulate?"
QE is going into the stock market, not the economy. Real wages have been declining, which is an unwealth effect. Stimulus has been for the benefit of the banks.
Ships have been overbuilt, capacity to the roof. My uncle, who owns shares in a few ships himself, says that this index is like measuring the health of the computer industry by dividing the price of a computer by its processor size (price per processor size has dropped). Instead of measuring actual volumes shipped.
Baltic Dry went from 700 (Jan 2013) to almost 2200 (Oct 2013).
Not sure what is shipping, but there's a lot of oil stored in tankers beyond the Straits of Hormuz - wonder if oil has a spoil date. hmmmmmmm
Look for news of exploding tankers coming soon - keeps oil price up/inflation running and the BDI riding high.
Oil is very stable because after spending several million years deep under ground only single bonds between the C atoms are left (alkanes). No problem to store it for many years.
The jump in numbers between the middle of august and the end of september corresponnded with
the opening up of the northern shipping route through the arctic around russia,
from the north sea to the bering straights and back ...
those ice-class freighters command hellacious day-rates ....
once it iced over again, we are back to normal.....
(are there people who spend so much time indoors with their heads in charts,
that they never have any contact at all with the "real" world?)
Utter nonsense:
http://www.platts.com/latest-news/metals/melbourne/capesize-freight-rate-climb-may-be-short-lived-27500169
If you lookat a map you will see that one does not have to travel the arctic to get from Austrailia or Brazil to China. ZH, the land of makebelieve.........You've got Cramer and Durden, two Yo-Yo's that belong in the same padded cell. Both have followings.
LOOK... WE DON'T CARE ABOUT
October US Manufacturing Output Tumbles To 2009 Levels. nor do we give a shit about the baltic dry index. we are going to push the s&p to world record highs and continue to repeal all the economic laws you were taught in school. to the moon, bitches! bernank p.s. so quit your whining and stop with all the bullshit articles about an imminent financial calamity.at least until this afternoon -that's when it starts.
Its probably all the Xmas stock that made the high. All delivered now and in the shops.
Anyone else remember the "ghost fleet" from 2009?
About twice a month I have occasion to cross the bridge over the Panama Canal. This gives me a view of all the ships at anchor just outside the canal right of way. I note that the number has increased recently, so that about 30 ships lay at anchor continuously. It has become rare to see container-laden ships making the passage.
Yes. Container ships are travelling slowly and going around the Capes