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Baltic Dry Index Collapses 50% From December Highs To 5-Month Lows

Tyler Durden's picture




 

We are sure it's just a storm in a teacup; just a brief interlude before the IMF's ever-changing forecast for global trade growth picks right back up again and demand to ship dry goods surges back to the inventory stuffed levels of Q4. But, for now, the Baltic Dry Index (admired when it's rising, ignored when it drops) has collapsed by over 50% from its December highs and is back to August lows.

 

 

 

Charts: Bloomberg

 

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Thu, 01/30/2014 - 09:15 | 4383598 Occident Mortal
Occident Mortal's picture

I love this index

Thu, 01/30/2014 - 09:25 | 4383629 buckethead
buckethead's picture

I blame the Polar Vortex, and the Polar VortexII... And Teh Taper

Thu, 01/30/2014 - 09:52 | 4383652 TheGoldMyth
TheGoldMyth's picture

The other way around. The baltic dry index drop is analagous to a sharp drop in CO2 emissions, or indicates the use of the fossil fuel (Coal) is decreasing which causes the weather to cool down and the polar vortex and global cooling according to the adherents of CO2 climate science.

As further proof, this coincided with an ice breaker (Ship) that was trapped in antarctic ice completely filled with climate scientists (Australia manufactures vast quantities of climate scientists), around fifty of them on this ocassion. Had any one of them checked the batlic dry index before departing, they could have anticipated the increasing Antarctic sea ice.
http://joannenova.com.au/2013/12/antarctic-ice-swallows-boat-media-spin/

Thu, 01/30/2014 - 09:52 | 4383738 WarriorClass
Thu, 01/30/2014 - 17:00 | 4385419 Squid-puppets a...
Squid-puppets a-go-go's picture

um - while the baldry can be a bell-weather (sorry for the weather analogy excuses) for economic collapse - doesnt this just indicate reversion to seasonal mean given the rise in traffic pre-xmas?

Thu, 01/30/2014 - 12:18 | 4384245 Crash Overide
Crash Overide's picture

<-- The economy sucks...?

<-- Due to global warming arctic sea ice is up 60% which in turn has closed the north west passage therefor rendering those shipping lanes none navigational causing a 50% drop in the ability to deliver goods? lol

Thu, 01/30/2014 - 09:34 | 4383676 AbelCatalyst
AbelCatalyst's picture

Show a 5 year chart and this drop is not all that significant.  In early '10, '11, '12 there were similar drops...  Early 2013 was an anomoly and the spike at the end of 2013 was the only spike for the entire year...  To me the 2013 flatline trend is far more significant...  The lack of noise up and down is a very big deal... Things are cooling down, deflation is setting in and the economic winter season is coming quickly...  Bundle up ZH'ers!! 

http://www.bloomberg.com/quote/BDIY:IND/chart

Thu, 01/30/2014 - 09:42 | 4383699 Occident Mortal
Occident Mortal's picture

This is true.

 

In 2008 the Baltic Dry was over 11,000.

 

Shipping is about 1/10th the cost of what it was before the crisis.

Thu, 01/30/2014 - 10:17 | 4383829 quasimodo
quasimodo's picture

Shipping might be a fraction of what is was, but I sure as hell can't put that in the bank

Thu, 01/30/2014 - 12:25 | 4384275 OutLookingIn
OutLookingIn's picture

Yes. On the BDI 5 year chart, the recent (December 13) double peak spike, was the first time the index has climbed above its 200 DMA since the crash of 08! The long term 5+ years trend is still fully in force. As for the old 'red herring' of over-supply of ships - latest figures show this not to be the case, as the peak in ship breaking of older inefficent vessles has run its course and new order contracts signed in better times, have been delivered.

Welcome to the "New Normal"!  

Thu, 01/30/2014 - 13:17 | 4384415 toadold
toadold's picture

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/106059...

I'm seeing a lot of articles saying that deflation will hit frist, hardest, and fastest. Attempts to print money on no growth economies won't work? 

Thu, 01/30/2014 - 09:14 | 4383600 MFLTucson
MFLTucson's picture

So we have a great recovery as told to the American Sheep by the Kenyan snake oil salesman and no goods are being shipped?  haha

Thu, 01/30/2014 - 13:29 | 4384451 SDShack
SDShack's picture

Recovery Summer 6.0 is coming. Just like the previous 5 years.

Thu, 01/30/2014 - 09:16 | 4383605 TeamDepends
TeamDepends's picture

Shipping "dry goods" is so 1830, we do everything electronically now, in the blink of an eye!

Thu, 01/30/2014 - 09:21 | 4383616 MFLTucson
MFLTucson's picture

Shipping "dry goods" is so 1830, we do everything electronically now, in the blink of an eye!

 

Is that so?  You have no idea what you are talking about.  Dry good include food, manufacgted items etc.  Read up before you post such a ridiculos comment.  Explain to us how you get goods from point A to point B with the blink of an eye?

Thu, 01/30/2014 - 09:24 | 4383627 PartysOver
PartysOver's picture

MFLTucson,  I think TeamDepends post was a little tongue-in-cheek sarcasm.   Unbunch you shorts.  And breathe.

Thu, 01/30/2014 - 09:24 | 4383631 slotmouth
slotmouth's picture

You are a slobbering idiot.

Thu, 01/30/2014 - 09:26 | 4383639 I_rikey_lice
I_rikey_lice's picture

lighten up francis.

Thu, 01/30/2014 - 09:41 | 4383695 kridkrid
kridkrid's picture

When you stole that cow and your friend tried to make it with that cow... I wanna party with you, cowboy.

Thu, 01/30/2014 - 09:32 | 4383659 Save_America1st
Save_America1st's picture

C'mon man, didn't you know we've had Star Trek-style teleportation systems since the 1960's???

Dude (MFLTucson)....it's called "sarcasm", obviously the comment was intended to be facetious.  Maybe you just haven't woken up yet this morning with your teleported coffee fresh picked and perked from Costa Rica!  It only takes the blink of a eye!  lol

Thu, 01/30/2014 - 09:39 | 4383691 MontgomeryScott
MontgomeryScott's picture

OCH! Th' coffee transporter pad shorted out again! It'll take 15 minutes to fix it, d'ya ken?

I CANNA' CHANGE THE LAWS OF PHYSICS! By then, the whole BDI might be sucked in to the solar, um, polar vortex...

Thu, 01/30/2014 - 10:04 | 4383779 Save_America1st
Save_America1st's picture

We need that coffee transporter functioning NOW, Mr. Scott!  Can you give it more POWER??!!!  If we can't get MFLTucson his coffee, that cranky Klingon is going to start a galactic war with the Baltric Dry Federation!!!

C'mon, Scotty!!!  We need more power, man...you can do it!!!

Thu, 01/30/2014 - 10:27 | 4383880 TuPhat
TuPhat's picture

I need more global warming.  This has been a very cold winter.  Can the transporter beam me some warmer air?

Thu, 01/30/2014 - 12:48 | 4384341 SunnyDD
SunnyDD's picture

sorry.

Your coffee transporter is functioning,

I just front-run you with a short wire.

hahaha.

 

 

 

Thu, 01/30/2014 - 13:32 | 4384456 SDShack
SDShack's picture

Scotty, the coffee transporter is out! Quick, divert ALL emergency power to the coffee maker! Prepare to transport coffee using shuttle craft.

Thu, 01/30/2014 - 09:32 | 4383666 Headbanger
Headbanger's picture

Oh no.. Please keep going cause we need some laughs here on "Friday" morning (in Siberia)

Thu, 01/30/2014 - 18:08 | 4385688 Notarocketscientist
Notarocketscientist's picture

Must be the 3D printing impact eh

Thu, 01/30/2014 - 09:17 | 4383606 glaucon was right
glaucon was right's picture

The endgame is getting closer and closer.

Thu, 01/30/2014 - 09:22 | 4383620 kridkrid
kridkrid's picture

I've been saying that since 1993. I've been emphatic since 2008.

Thu, 01/30/2014 - 09:24 | 4383628 Sudden Debt
Sudden Debt's picture

21 years in a row... like watching paint dry :)

Thu, 01/30/2014 - 10:00 | 4383765 KickIce
KickIce's picture

Some ZHer said it before, death by a thousand paper cuts.

Thu, 01/30/2014 - 09:29 | 4383656 glaucon was right
glaucon was right's picture

Eh, I have to find another hobby than.

Thu, 01/30/2014 - 09:23 | 4383626 Sudden Debt
Thu, 01/30/2014 - 09:29 | 4383649 BandGap
BandGap's picture

Uh, the game started a while back. We're in the second quarter now, all knotted up at 0-0.

Thu, 01/30/2014 - 09:18 | 4383608 papaswamp
papaswamp's picture

HARPEX shows stagnation below the 5 yr average. MOAR is needed!
http://www.harperpetersen.com/harpex/harpexRH.do?timePeriod=Years5&&data...

Thu, 01/30/2014 - 09:22 | 4383619 _ConanTheLibert...
_ConanTheLibertarian_'s picture

The patient looks quite dead.

Thu, 01/30/2014 - 09:25 | 4383632 Sudden Debt
Sudden Debt's picture

Bernie? No he's not dead! He's just drunk!

Thu, 01/30/2014 - 09:28 | 4383648 Winston Churchill
Winston Churchill's picture

Just needs that final bowel evacuation before we tuck him in the coffin.

Thu, 01/30/2014 - 09:59 | 4383761 TrumpXVI
TrumpXVI's picture

"He's dead, Jim."

- Doc McCoy

Thu, 01/30/2014 - 09:18 | 4383610 B2u
B2u's picture

Can't I just get a 3D printer for everything?

Thu, 01/30/2014 - 09:21 | 4383622 negative rates
negative rates's picture

You can, but then why did you vote to subsidize all those kids in the past? 

Thu, 01/30/2014 - 12:23 | 4384267 Crash Overide
Crash Overide's picture

"Can't I just get a 3D printer for everything?"

 

Don't forget robots...   Oh wait, 3D printers are robots.

Thu, 01/30/2014 - 09:18 | 4383612 Sudden Debt
Sudden Debt's picture

It'll take about 3 more months before we see this effect in the real economy, so nothing to worry about.

In today's economy people don't really need physical goods to sell and make product.

See this invisible microwave oven? Yes? 350$ and it's your's! And I'll give a this invisible remote that works with it!

Thu, 01/30/2014 - 14:46 | 4384700 RabbitChow
RabbitChow's picture

Do you take invisible cash?  Oh wait....

Thu, 01/30/2014 - 09:18 | 4383613 _ConanTheLibert...
_ConanTheLibertarian_'s picture

http://www.bloomberg.com/quote/BDIY:IND/chart

Check 2011. It happened before.

I agree though that things are hitting the fan right now.

Thu, 01/30/2014 - 09:20 | 4383615 CitizenPete
CitizenPete's picture

Sea ice issues. a.k.a. It's the WEATHER

Thu, 01/30/2014 - 09:22 | 4383617 JOHNICON
JOHNICON's picture

Doomers grasping at straws.  Why do you guys keep harping on this index that has absolutely no predictive value?  Oh, right, because you all bankrupted yourselves over the last five years by betting against the trend.  But, hey, at least you'll be "proved right" in the end.

Thu, 01/30/2014 - 09:33 | 4383671 kridkrid
kridkrid's picture

It's a funny spot to be in. Knowing that you're right... being able to articulate why you are... able to defend your position against anyone, able to explain, in hindsight, why the reset has not yet happened while explaining why action X, Y or Z has not solved a thing, only prolonged the inevitable... yet here we are. Add to the irony... I don't want to be right... My relatively comfortable life is, well, relatively comfortable.

Thu, 01/30/2014 - 10:25 | 4383866 mijev
mijev's picture

Wow thanks for your wonderful insight and your personal financial predictions. I wonder what the earth did wrong to throw up ignorant cunts like you. 

Thu, 01/30/2014 - 12:03 | 4384195 JOHNICON
JOHNICON's picture

You're welcome.  I'm only trying to point out, in as sarcastic a way as possible, that this index is absolutely useless.  It should be clear by now, given the number of articles on ZH since 2009 gasping in wonderment at the possibility of a full on economic meltdown everytime there's a collapse in the BDI.  The collapse happens every year and every year there are breathless predictions on this site of how the s**t's about to hit the fan.  And...it doesn't happen.  Yet I bet there are a number of people who read this site who have based a portion of their investment decisions on articles like this.  That's not ZH's fault but I find it encouraging that I received so many down votes.

Thu, 01/30/2014 - 12:27 | 4384280 Crash Overide
Crash Overide's picture

It keeps coming until the day it stops.

Thu, 01/30/2014 - 12:18 | 4384240 JOHNICON
JOHNICON's picture

By the way, I prefer the term "gash" over cunt.  :)

Thu, 01/30/2014 - 10:34 | 4383910 TuPhat
TuPhat's picture

I'm not bankrupt yet but I keep buying more gold and the bank balance gets smaller.  I also buy ammo and food but I keep eating the food so I must be in a lot of trouble.  I am so stupid I bought as much gold and silver as I could afford starting in 1984.  I'm retired now so the buying has slowed down a lot and the final collapse has not happened.  The best part is, the ammo is still good.

Thu, 01/30/2014 - 12:16 | 4384236 Rising Sun
Rising Sun's picture

BDI is an indicator.  It indicates.

 

Is that you Krugman?????    KRUGMAN!!!!!!!!!!

 

 

Thu, 01/30/2014 - 09:22 | 4383623 Max Damage
Max Damage's picture

Was that on a non GAAP basis though ;)

Thu, 01/30/2014 - 09:23 | 4383624 Fiat Burner
Fiat Burner's picture

No one cares about this. They only care about Farcebook hitting new highs.

Thu, 01/30/2014 - 09:24 | 4383625 MFLTucson
MFLTucson's picture

What happens when consumer demand drops off a cliff as it has over the last quarter? Shipments of goods and raw materials will likely follow. How are those shipments measured? Let’s check in on trends and developments within the Baltic Dry Index.

The Financial Times highlights the fact that the BDI is submerging precipitously and writes today:

…worrying signals about the global recovery remained. The Baltic Dry Index, a gauge of dry bulk commodity shipping costs seen by many as a leading indicator for growth, fell for a 29th successive session to its lowest level for more than a year.

- See more at: http://www.senseoncents.com/tag/baltic-dry-index/#sthash.mlZrQhD3.dpuf


Thu, 01/30/2014 - 09:26 | 4383634 ZeroPoint
ZeroPoint's picture

Where do they store all the inventory that is being stuffed? Are there fleets of container ships out just floating about that never get unloaded?

 

 

Thu, 01/30/2014 - 09:26 | 4383636 buzzsaw99
buzzsaw99's picture

i bought some underwear yesterday bitchez. that should be good for the eCONoME

Thu, 01/30/2014 - 09:28 | 4383642 new game
new game's picture

something is wrong. how could such an index move this dramaticly? flow of goods would normally wane or wax like the moon cycles. calling bullshit based on common sense...

Thu, 01/30/2014 - 09:28 | 4383645 enloe creek
enloe creek's picture

should i enter the bunker now i really would like to see the final LOR smaug is going to burn down the village but if not can I wait til ragnarok

Thu, 01/30/2014 - 09:30 | 4383658 new game
new game's picture

ot: gold slam again...

Thu, 01/30/2014 - 09:36 | 4383679 Winston Churchill
Winston Churchill's picture

I just bought 15 mins ago.

Works like magic everytime.

Thu, 01/30/2014 - 09:50 | 4383732 Legolas
Legolas's picture

ditto that.

Laugh, knowing their game is almost over.

Thu, 01/30/2014 - 09:36 | 4383683 unplugged
unplugged's picture

which will continue until there is no more physical for sale anywhere - which will take about 2 to 3 more years - keep stackin'

Thu, 01/30/2014 - 11:13 | 4384041 KnightTakesKing
KnightTakesKing's picture

I think the end will be coterminous with the emptying of the vaults of GLD (and related EFTs). They are using the inventories of GLD to keep this party going. Once GLD is empty there will be NO sovereign gold held in the West. The the collapse will commence.

Thu, 01/30/2014 - 13:48 | 4384504 halfawake
halfawake's picture

coterminous, wtf, had to look that up.

Thu, 01/30/2014 - 09:32 | 4383668 TheCosmicTaco
TheCosmicTaco's picture

China is using close to half of the hard commodities in the world, and plenty of the soft from soybeans to palm oil. China is also sitting on a monstrous $25 trillion credit bubble. I wouldn't go long the BDI just yet. This whole EM unwind thing is only just getting started. Once the Fed tapers by 100%, all hell is gonna break loose around the world. There are bubbles everywhere, in currencies, commodities, real estate, debt, you name it.

It's gonna be a truly cosmic bust.

Thu, 01/30/2014 - 09:36 | 4383685 Angelo Misterioso
Angelo Misterioso's picture

the localized change from Dec 2013 looks grim but step back and remember this is down 90% from the peak it hit in May of 2008....90%....even the decade average is almost 190% higher...

Thu, 01/30/2014 - 10:02 | 4383774 MontgomeryScott
MontgomeryScott's picture

I found a set of historical charts that might be of interest (although most of you already have this information).

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Oil price is somewhat of a driver, it seems. (Naturally, because ships run on oil, NOT 'green energy devices', or 'cyberwarp reactors')

I saw a divergence between the two...

During the period from Jan. '01 to abuot the middle of '08, BDI was higher due to shipping still being lucrative. Oil spiked, shipping rates dropped percipitously (the so-called 'great recession' spooked the market demand), and it HAS NOT RECOVERED, so shipping profits are obviously depressed...

Am I close, here?

Thu, 01/30/2014 - 10:40 | 4383930 TuPhat
TuPhat's picture

Thanks MScott, good charts.  ZH didn't quite give me enough chart to look at.

Thu, 01/30/2014 - 11:18 | 4384068 zyby
zyby's picture

Still way above this time last year. This is no big deal. Ignore.

Thu, 01/30/2014 - 11:21 | 4384080 hoist the bs flag
hoist the bs flag's picture

wake me when it hits 666 again...

Thu, 01/30/2014 - 11:23 | 4384081 hoist the bs flag
hoist the bs flag's picture

.

Thu, 01/30/2014 - 12:09 | 4384212 Caracalla
Caracalla's picture

This and the GDP numbers tell us that manufacturing is on the rebound in the United States, thus, less need for shipping from China and other third world producers.  Another reason to BTFD

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