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Baltic Dry Drops 9th Day In A Row; Worst Q1 In Over 10 Years

Tyler Durden's picture




 

For a few weeks there, as the Baltic Dry Index rose, talking-heads were ignominous in their praise of the shipping index as a leading indicator of an awesome future ahead for the world economy. The last 9 days have smashed that 'hope' to smithereens (and yet the talking-heads have gone awkwardly silent, having moved on to some other bias-confirming meme). The Baltic Dry is down 25% in the last 2 weeks, back near post-crisis lows, and has just suffered the worst start to a year in over a decade. But apart from that, seems global trade is all-good and about to take off any minute now...

 

The worst start to a year in over a decade...

 

As Baltic Dry has fallen 9 days in a row, down 25%, and is back near post-crisis lows...

It seems the demand for shipping dry bulk is not strong...

 

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Fri, 04/04/2014 - 18:54 | 4626737 Calmyourself
Calmyourself's picture

Baltic Dry; the most worthless metric ever..  Trotted out on Friday nights as red meat, it is past its sell by date.

Call it a "collapse" yeah that'll do it.

Fri, 04/04/2014 - 18:56 | 4626743 LetThemEatRand
LetThemEatRand's picture

Looking at the chart going back to 2008, it actually seems like a pretty decent metric of the real economy.  

Fri, 04/04/2014 - 19:06 | 4626766 DaddyO
DaddyO's picture

IMHO, the BDI is a good measure of our consumptive society and its spending.

I have followed it for several years as a gauge of how much is being replenshished.

When the BDI drops it means the spending stopped and the goods on the shelves don't need replaced.

Pretty real measure with out all the manipulation of other metrics our dear leaders are so adept at currently.

DaddyO

Fri, 04/04/2014 - 19:17 | 4626787 nope-1004
nope-1004's picture

Nice one Calmy - lmao.... money huslters are all the same.  They place no value in actually producing and shipping something, only churning the pump 'n dump trader scheme thousands of times a second.  Ya... that's "production".

 

 

Fri, 04/04/2014 - 19:32 | 4626810 Kitler
Kitler's picture

Back in 2008 it would cost you $150 million to buy a 5 year old used Capesize vessel of 180,000 tonnes dw. Fast forward to today and it's yours for a paltry $35 million OBO.

Orders for the construction of new vessels are in the tank so it's a good thing that scrapping is at an all time high or the index would be closer to zero.

All the numbers you want to know in simple graphs below.

http://www.equitygate.de/pages/user/downloads/presse_images/131029%20Bul...

Fri, 04/04/2014 - 20:22 | 4626932 disabledvet
disabledvet's picture

http://www.youtube.com/watch?v=QbjfesCI254

they said Genesis was washed up and then they found a drummer.

Fri, 04/04/2014 - 21:09 | 4627055 NoDebt
NoDebt's picture

Thanks for the "blast from the past".  I loved Genesis in their "Miami Vice era" days with Phil doing lead vocals.  But I like the older stuff just as much with Gabriel behind the mic (Trick of the Tail, being one of my favorites).

Let me return the favor:

http://www.youtube.com/watch?v=StfLy3pzno0

For when there's no coffee around.

 

Sun, 04/06/2014 - 00:41 | 4629365 jeff montanye
jeff montanye's picture

the post begins with the use of the non-word "ignominous" which looks like ignominious which means ignoble or unworthy.  what is probably meant is unanimous meaning without dissent.  imo errors like this undercut credibility a bit, even if unjustifiably.

Fri, 04/04/2014 - 19:32 | 4626824 walküre
walküre's picture

Apparently the massively ramped up production and shipping of Bentleys and Maseratis still doesn't require as many bulk resources and container ships.

An economy where 99% earn crap for a living is not an economy. It's a plantation! 1% massas rule over 99% niggas. We're all niggas now! Red white yellow brown or black doesn't matter. Niggas come in all colors, shapes and sizes. Why the fuck is that so hard to comprehend for most who are still living in Lalaland clinging on to their cherished "middle class" status. It's bullshit to consider yourself "middle class" even on 100k p/a when the elite spends that amount on toilet paper in their smallest lake side "cabin".

Fri, 04/04/2014 - 20:37 | 4626971 CheapBastard
CheapBastard's picture

I noticed Cali lead the way in "job creation" last month followed by texas as #2. However, reading cloely, those 37,000 jobs in Texas were mostly in the service sector, and of those, the majority were financial services...which produce nada.

Just say'n "job creation" does not equal any sort of recovery unless it's meaningful and you produce sum ting.

Fri, 04/04/2014 - 20:59 | 4627024 FredFlintstone
FredFlintstone's picture

eyes a house ni99a an proud ud it!

Fri, 04/04/2014 - 21:42 | 4627144 Calmyourself
Calmyourself's picture

It is trotted out continously as prima facie evidence of imminent collapse so perhaps I am making an editorial judgement, I could search how many times and under what headlines but I dont care enough.   LTER building the swag for the next pro-gov rant, nicely done...

Fri, 04/04/2014 - 18:57 | 4626745 Looney
Looney's picture

If your BALTIC is too dry, try Vagisil (sp?)  ;-)

Looney

Fri, 04/04/2014 - 20:54 | 4627006 Professor Fate
Professor Fate's picture

I had a "Bald Dick Dry" from a botched vasectomy a few years back but my urologist put it right with some testosterone.  No questrion it is a good In-Dick-Cator of the future though.

Fate the Magnificent
"Push the Button, Max" 

Fri, 04/04/2014 - 20:58 | 4627017 FredFlintstone
FredFlintstone's picture

WTF is that? I googled it, but no luck.

Fri, 04/04/2014 - 19:04 | 4626763 Stanley Lord
Stanley Lord's picture

Exactly right, who complies this index anyway?

 All you need to know is Dennis Gartman has total respect for Baltic Dry.

Fri, 04/04/2014 - 19:12 | 4626784 NOTaREALmerican
NOTaREALmerican's picture

If you stare at it long enough, and you've got enough cold-medicine in you,  and it's late on a friday at your zombie bank, it almost looks like a, a,  i donno.  something...

Fri, 04/04/2014 - 19:18 | 4626797 dmpol
dmpol's picture

Friends, when oil prices were depend on a demand, OPEC, etc!? We may discass a lot of things, news, open long/ positions, but you understnd, that Obama shouldn't go to Saudi Arabia if he wants to go down oil prices - it's only futures market now!)

Fri, 04/04/2014 - 22:26 | 4627238 Bunga Bunga
Bunga Bunga's picture

 

 

The best economic indicator you've never heard of

"...it provides both a rare window into the highly opaque and diffuse shipping market and an accurate barometer of the volume of global trade. ...

The BDI is a good leading indicator for economic growth and production. After all, it doesn't deal with container ships carrying finished goods. It deals with the precursors to production: bulk carriers carrying building materials, cement, grain, coal, and iron. Unlike stock and bond markets, the BDI "is totally devoid of speculative content," says Howard Simons, an economist and columnist at TheStreet.com. People don't book freighters unless they have cargo to move.
...
Howard Simons charted the index against the Dow Jones World Equity Stock Market Index and U.S. Treasury 10-year notes. His conclusion: "It's a very good leading indicator."

http://www.slate.com/id/2090303/

 

Fri, 04/04/2014 - 18:56 | 4626741 Its Only Rock N Roll
Its Only Rock N Roll's picture

but who really ships anything any more?

Fri, 04/04/2014 - 18:58 | 4626746 Citxmech
Citxmech's picture

Apparently, nobody. . . 

Sat, 04/05/2014 - 17:48 | 4628670 Offthebeach
Offthebeach's picture

Real stuff is so...so barbaric. 

Forward fiat shipping! 

Fri, 04/04/2014 - 19:11 | 4626776 NOTaREALmerican
NOTaREALmerican's picture

Gosh,  I remember when the Baltic Dry Index was a doomer favorite...  years ago,  post crash when - another crash seemed right around the corner, and the wicked would be punished and you could almost ALMOST feel "Rightous Sword of Libertarian Justice" slaying the evil socialists, but then - like the hindenburg oman - it just all...  blew away.

Fri, 04/04/2014 - 19:56 | 4626845 Kitler
Kitler's picture

They just kicked the crash down to the next corner. It only cost around $30 trillion in new debt to do it. Each new corner will cost more.

P.S. The wicked never get punished.

Fri, 04/04/2014 - 20:28 | 4626953 disabledvet
disabledvet's picture

"they just double down."

http://www.youtube.com/watch?v=BsqdGsDGloE
Germany never gave that apology did they.

Fri, 04/04/2014 - 21:00 | 4626989 Kitler
Kitler's picture

And they never let you leave the table until they win.

Fri, 04/04/2014 - 19:12 | 4626783 Yancey Ward
Yancey Ward's picture

In our new modern economy, the only things of value are transported electronically.  Now eat your dollars/yen/euros and shut the fuck up!

Fri, 04/04/2014 - 19:16 | 4626794 Cattender
Cattender's picture

it's just because of the weather.. soon as it warms up (JULY) things get back to Regular AWFUL.

Fri, 04/04/2014 - 19:24 | 4626812 TooBearish
TooBearish's picture

wicked good...bullish buyem

Fri, 04/04/2014 - 19:28 | 4626819 Make_Mine_A_Double
Make_Mine_A_Double's picture

It is not a perfect index by any means as over the horizon costs weigh and skew it with at least a quarter lag. However, being in the shit sandwiich business of commodity shipping and chartering I can say it offers a decent look around the corner as to what's coming ahead and what is said about Q1 certainly tracks with with our numbers.

Fri, 04/04/2014 - 21:08 | 4627057 Omen IV
Omen IV's picture

i think its much worse than the statistics show - recently the three largest owners combined into one company - while the deal is not closed yet - you would think that rates would stabilize and fleet retirements would be coordinated - the banks, especially in Germany are severely impaired by these loans - Commerzbank et al -

the rates going up for a few weeks were in part due to this deal - there must be a bigger problem in play

Fri, 04/04/2014 - 19:29 | 4626820 WTFUD
WTFUD's picture

Balls are Dry & Flakey

Fri, 04/04/2014 - 19:52 | 4626830 TheRideNeverEnds
TheRideNeverEnds's picture

It seems the demand for shipping dry bulk is not strong...

 

That is because in today's economy we sell clicks, page-views, and fake likes.   Those things ship through cyberspace and are funded with an endless supply of ZIRP fiat (which is also sent though cyberspace).  

 

Long electrons!  

Fri, 04/04/2014 - 21:39 | 4627135 logicalman
logicalman's picture

Are long electrons quantum mechanically different from ordinary ones?

Sat, 04/05/2014 - 01:19 | 4627503 Anusocracy
Anusocracy's picture

Maybe they would be short at relativistic speeds.

Fri, 04/04/2014 - 19:51 | 4626860 q99x2
q99x2's picture

Not a good time to be a Globalist. The ships have quit working for them.

Sat, 04/05/2014 - 09:36 | 4627837 lakecity55
lakecity55's picture

Thanks again, ZH. I thought about the Baltic yesterday and was going to check it.

I love this place, I also get commentary.

Sat, 04/05/2014 - 11:49 | 4628005 skunzie
skunzie's picture

We have a built in gauge of the economoy here in Cheyenne.  Lately the number of Union Pacific trains passing through the switching yards here has fallen noticably.  Rails are known to ship mass quantities of raw materials as well as finished goods, and the article above would tend to confirm this fall in demand for raw materials. 

Sat, 04/05/2014 - 12:48 | 4628116 kurt
kurt's picture

Look at the start and end point of the above charts. Now look at:

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

Now do you see? The BDI fell off a cliff and stayed that way. The above charts track the echoes and death pangs NOT the horrendous truth.

Sat, 04/05/2014 - 13:16 | 4628166 mh505
mh505's picture

The BDI is nowhere near its post-crisis lows.  These were somewhere in the 600s; another 50% drop to go.

Sun, 04/06/2014 - 00:40 | 4629361 jonjon831983
jonjon831983's picture

I've seen this is supposedly the more accurate index or complimentary to BDI:

HARPEX

http://www.harperpetersen.com/harpex/harpexRH.do?timePeriod=Years10&&dat...

 

via BDI's wiki

"Another index, the HARPEX,[8] focuses on containers freight. It provides an insight on the transport of a much wider base of commercial goods than commodities alone. HARPEX is regarded as a Current-Activity Indicator, because it measures and charts the changes in freight rates for 'container ships.' Container ships typically carry a wide variety of finished goods from a multitude of sellers. These are factory output goods headed for retail markets, at the other end of the supply chain.[9]"

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