It's Official: The Baltic Dry Index Has Crashed To Its Lowest November Level In History

Tyler Durden's picture

2015 has been an 'odd' year. Typically this time of year sees demand picking up amid holiday inventory stacking and measures of global trade such as The Baltic Dry Index rise from mid-summer to Thanksgiving. This year, it has not.


In fact, it has plummeted as the world's economic engines slow and reality under the covers of global stock markets suggests a massive deflationary wave (following a massive mal-investment boom). At a level of 631, this is the lowest cost for Baltic Dry Freight Index for this time of year in history.. and within a small drop of an all-time historical low.



Hard to ignore something that has never happened before as anything but a total disaster for world trade and economic growth.

* * *

As we concluded previously after exposing the collapse in Ships...




And Trucks...


We have in the past joked that the only thing that could possibly save the world from what is a trade recession is if the central banks can somehow find a way to "print trade" the way they artificially boost asset prices higher to give the impression of a status quo normalcy. Unfortunately, as this is not a real option, and with both global and US trade in freefall, many wonder just how will the world's central planners mask this most dangerous aspect of the global economic slowdown?

Charts: Bloomberg

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Glass Seagull's picture



Fed to announce that it will be securitizing global trade volumes, and will buy the shit out of said securities.

TBT or not TBT's picture

The physical economy is going digital fast, so duh, less stuff to ship, people.  Yawn.  

Bunghole's picture

Shipping is so 20th century.

It's all drones these days.

Mr. Cynic's picture

Who needs shipping when I can just order my shit on the internet?

Expat and Happy's picture

Yep, gotta get a digital refrigerator shipped to me to keep my digital milk cold.

Still drink analog coffee, though. 

herkomilchen's picture

Empty container ships going back and forth will create prosperity.  Keynes said so.

Martian Moon's picture

well we are halfway there then

now if we could also get the Asia to America leg of the journey  to be empty, peak prosperity awaits

Hitlery_4_Dictator's picture

Pfft, who cares. It won't affect stocks, so it's a non-story. Wake me when it does. 

KnuckleDragger-X's picture

Of course it'll affect stocks, haven't you noticed that transports have been trending up?

Implied Violins's picture

That'll be a tough one, because you'll probably be dead.

Jason T's picture

Gonna be a lot of drunk santa's this Christmas

ghostzapper's picture

Next Yuan deval (yes, deval) otta send DXY towards 108ish (not instantly but on its way to 120ish).  

KnuckleDragger-X's picture

Wall St. and the Fed will be standing on a pile of smoking rubble screaming "WE WON" while the economic mushroom clouds cover the earh.....

RawPawg's picture

just means more fist fights over the only TV's in retail show room aisle day after T'giving

3 total..that's all that have/had

Bill of Rights's picture

It's a fucken utopia all!!!

semperfi's picture

"what difference does it make?"


E.F. Mutton's picture

There may be a run on shipping containers for housing when that bubble pops...again...

herkomilchen's picture

Print the trade.  Hm, intriging idea.  Maybe hyperinflate one country's currency so its exports explode, then hyperinflate the other country's currency so its exports explode.  Just go back and forth.  Bam, lots of trade!  I would have made such a great central planner.

Hohum's picture

I prefer Canada Dry.

yogibear's picture

And the unemployment rate dropped?

Usually when people gain employment they spend. Looks like it isn't happening.

herkomilchen's picture

Glad I don't own a shipping company.

tmosley's picture

This is easily fixed. All we have to do is buy up the shipping capacity with printed money, and move empty containers back and forth.

Keynsian paradise! Full employment! Everyone should run out and buy their own transport ship, the Fed will guarantee full loads!

yogibear's picture

How long can they keep the lies of a recovery going?

delivered's picture

Yep, one of the four key macro data points I'm most focused on which include the BDI (record lows), commodity index (in a free fall over the past year), interest rates (now rising across the board), and the USD (set to break past 100 are roar north of 110). My take on all of this is as follows:

- PMs: What was the title of MC Hammer's one hit, oh yeah, "Hammer Time" (at least in USDs). Hard to see any real support for paper prices in PMs in the near future as gold retreats back to $1,080, then to $1,050, to $1,020 and then breaks below $1,000 maybe to finally find a room in the basement at $800. Of course this is all on paper and priced in USDs as it will be a challenging period for PM investors (myself included) but it will also pay to be very patient and diciplined, especially when acquiring physical.

- Deflation: Will fully take hold across tangible products/business models (while service models such as healthcare continue to see price increases) and then spill throughout the entire economy as the USD appreciates and deflation is imported into the country. But deflation will only be temporary as before hyper-inflation can take hold, a deflationary period needs to occur. In this period, the economy and tax base will struggle to expand, begin to deflate, and then compress the tax base as taxable earnings deflate. This will collapse the GDP and tax receipts but with constant (and increasing) debt obligations, it will become harder and harder to service debt at all levels - personal, private business, and public. Everyone must cut back or sell assets to repay debt, thus amplyfying the downward spiral until at first a debt crisis is realized and then a currency crisis (triggering hyper-inflation).


- EMs: What a mess this has become and spilling over into DMs such as Canada. For companies that borrrowed in USDs and did not hedge (whatever value this may offer), repaying debt will become extremely difficult and lead to asset sales (at fire prices), cost reductions (read chopping heads), or defaults. Further, EMs will have to defend plunging currencies with interest rate increases or sales foreign reserves (e.g., US assets such as bills/notes/bonds) to support domestic currency prices. On top of this, EMs dependent on base materials, metals, etc. are already seeing decreased demand and lower prices via USD pressure so you've got a perfect storm brewing in these markets. Oil speaks perfectly to this mess as the damage done from low prices is only starting to work through the global markets.

- US Debt: My question to everyone is simple - Who is left to buy this crap? I know, I know, the correct answer is the Fed through its proxies, backdoor partners, and incestuous CB relationship (e.g., BOJ or more appropriately, just BJ). Also, the four largest banks in the world in desperate need of perceived collateral to support their derivative positions that will explode are most likely buyers. And of course the sheepies in the US that fall for the MyRA accounts. But with EMs now in a liquidation mode (e.g., China), large oil producing countries now in survival mode (and liquidating), institutional investors fleeing all debt markets (HY, IG, US, etc.) and even the largest trust fund in the world having to sell net US holdings (i.e., social security that has more payments than receipts), it would appear to me that the UST market could get out of control very quickly.

Hard to see how this ends well and about the only outcome I can invision is the excessive rocking of a ship, with the passengers moving from side to side, back and forth, too quickly until the ship flips over and capsizes. Right now, the passengers are rushing back to the USD too quickly that may ultimately create a shock on the other side, each time becoming more and more severe. And when the move out of the USD finally occurs as too many people realize they are on the wrong side, well that is when all hell will really break loose.

Doubtful this year or next but I would watch the speed at which these four markets adjust as if the UST market breaks via the rush to liquidate and the Fed can't control a rapid increase in rates, it will take every asset down with it including equities, commodities, real estate, and credit. What a fine mess the Fed will have to deal with as if it stands back and let's the market price assets with fair interest rates, a massive asset price deflation will take place. If it attempts to stablize the market by really becoming the only "market maker" left that can handle massive selling in credit markets, then in effect it will have undertaken QE 4, 5, etc. and any credibility remaining will be lost (increasing rates while buying credit).

One thing is for certain is that I don't recall a period over the past 40 or 50 years of rate increases (whether undertaken by the Fed or forced by the market) that ends well for assets prices, period. And BTW, its not so much the fact that a rate increase of 25 basis points is important but rather the relative size of the rate increase. If cap rates used in valuing real estate transactions increase from say 7% to 7.5% or 8% (due to increasing rates), this would drive implied values in a commercial property down by 12 to 15% with a 1 point increase over a period of let's say 12 months. Not good news for the owners or lenders as just like that, the value of collateral has tanked and now impaired the value of the loan.

In the past, it has taken about 9+ months for rate increases to work through the economy and start to create some real damage in asset values. I would expect this time frame to compress and the asset price correction to be more severe/violent this time around as leverage across the board is excessive. So watch interest rates closely as the damage from an increase in borrowing costs of 50 basis points from say 2% to 2.5% (a 25% increase) is going to cause far more damage than an increase of 5 to 5.5% (just a paltry 10% increase).

Mr. Cynic's picture

Hey delivered, get a blog!  ;)

Tinky's picture

Thought provoking – thanks for your efforts.

ali-ali-al-qomfri's picture

I'm missing at least 6 white containers filled with light bulbs and windows,

anybody see them around?, they were to set sail on the Rena reg. in Monorovia,

anyone see 'em let me know,


Batman11's picture

We are always looking at various levels in the economic pyramid to judge its health.

Let's have a look at its foundations, the global consumer:

1) The once wealthy Western consumer has had all their high paying jobs off-shored. As a stop gap solution they were allowed to carry on consuming through debt. They are now maxed out on debt.

2) Japanese consumers have been living in a stagnant economy for decades.

3) Chinese and Eastern consumers were always poorly paid and with nonexistent welfare states are always saving for a rainy day. Western demand slumped in 2008 and the debt fuelled stop gap has now come to an end.

4) The Middle Eastern consumers are now too busy fighting each other to think about consuming anything and are just concerned with saying alive.

5) South American and African consumers are busy struggling with economies that are disintegrating fast.

Slumping global trade can only be expected.


Mr. Cynic's picture

Wow!  That is low for November......but of course it's due to the massive increase in ship building and newly available tonnage.  /s

gcjohns1971's picture

So all go to raise rates, right?

Unemployment down!

People happily buying Christmas gifts!

Shippers happily shipping all those products to destination!

All's well.






If unemployment is down, then people are working more.

If people are working more, then they're earning more.

If people are earning more then they're spending more.

If people are spending more then someone has to be moving the things they're buying...



Falling Down's picture

The holidays were cancelled, didn't you guys get the memo?

pocomotion's picture

There was a time you could really invest in Baltic Dry Index and you could-ah Been Somebody!  Could-ah been a contender...

Two Theives and a Liar's picture

The FED's bluff is now called. If they DON'T raise (I still don't see how they can given the overall leverage in place globally) it will be a wild holiday time even without EggNog!

Jim Willie believes the FED never ended QE and are printing over 1 trillion a month!

I tend to agree...

conraddobler's picture

It's a debt bubble aka a debt black hole.

It'll vortex in everything no matter what is done and they will do everything they can.   Things like this can be obvious for decades before they truly collapse I know I've watched this shitshow from a front row seat for decades.

I was studying the stock market in the 80's and noticed the peculiar sudden ramp job back then which was I thought the mere begings of what we are talking about, actually this is an eternal war of truth vs con jobs mankind always has to deal with,  it's all a massive con job. That's what the economy has become, a ponzi scheme of the most epic proportions ever constructed by man.

Truly it is a work of ponzi art and it continues apace until finally it breaks almost everyone and everything and all laws of reality are raped and pillaged to feed it.

Honestly it's awe inspiring in a kind of train wrecky kinda way.

The real fix for all this is fundamental math and common sense.   You have to first get control over the currency without that it's all a lost battle.

Then you have to make econonomic policy based on reality and on human nature alinged in a way to produce wealth using only sustainable growth for it to be mathematically feasible.  To do this you have to fight against the seasoned and fully entrenched money interests accumulated since the inception of human civilization.

Good luck with all that.

Jack Burton's picture

Listen to all Main Stream media. We are still deep into recovery and the economy is booming with 5% unemployment, which is functional Full Employment!

I think Media in the year 2015 has buried the entire nation into a deep cover up of all real news, instead they have created a Hollywood Economy, where the Media is the message. How many commandos to put in Syria trumps economic growth, debt and decline.

Kassandra's picture

Your assessment is completely correct.

Alananda's picture

Alert Brandon Smith!!

The Dogs of Moar's picture

How come the Fed isn't in charge of making up the Baltic Dry number?  For Christ's sake.

There's more to a recovery than hiring hamburger flippers.

Rikky's picture

Serious question.  Does the Baltic Dry Index actually mean anything to anyone, and I mean anyone and if so who?


If they implode all of Wall Street, Congress, Pentagon, and the White House, just like they imploded World Trade Center #1, #2, and building #7, they could destroy all the paperwork, hard drives, and copies of records. That way they could buy a few more hours of borrowed time, and the taxpayer would never be able to prove that the Baltic Dry Index really mattered in the grand scheme of things.

fancyfree's picture

Yes, it is true that fractional reserve fiat currencies have no way to stimulate trade, because the Bank for International Settlements is insolvent and in receivership in the Global Debt Facility.  I have made this point many times in the comment section on Zerohedge.  Why doesn't Zerohedge want to tell its readership about the ongoing Global Currency Reset, to replace paper currencies with local currencies and national currencies out of gold minted from the monetary gold reserves in the Global Debt Facility that is administered by the 188 Ministers of Finance on the Board of Governors of the World Bank and the International Monetary Fund?

Zerohedge is ignoring the elephant in the room.  Why?

A picture is worth a thousand words -- here is a link if it doesn't show in this comment: 

The coalition for the rule of law [the BRICS  (Brazil, Russia, India, China & South Africa), the G-77 (133 developing countries), Germany, the US minus the Federal Reserve] is changing everything by using the legal system to end the network of global corporate control (which has the private central banks at its hub).

 The likelihood that the coalition for the rule of law wins is 90-95%