• BullionStar
    05/30/2016 - 21:24
    The US Gold Market is best known as the home of gold futures trading on the COMEX in New York. The COMEX has a literal monopoly on gold futures trading volumes worldwide, but very little physical...

"Nowhere To Hide" As Baltic 'Fried' Index Careens To Fresh Record Low

Tyler Durden's picture




 

Another day, another fresh all-time record low in The Baltic Dry Index as Deutsche Bank's "perfect storm" appears ever closer on the horizon. Plunging 4.7% overnight to 445 points, this is 20% lower than the previous record low in 1986 and as one strategist warns, "It’s a brutal start of the year, there’s just nowhere to hide on the market."

 

 

"This looks like a ripple effect from what happened back in August," adds Alexandre Baradez, chief market analyst at IG France, hopefully looking forward, "it might continue for a few weeks, but given China’s central bank fire power, it shouldn’t last for more than that."

But Deutsche's "perfect storm" looms...

The improvement in dry bulk rates we expected into year-end has not materialized. And based on conversations we've had with several industry contacts, we believe a number of dry bulk companies are contemplating asset sales to raise liquidity, lower daily cash burn, and reduce capital commitments. The glut of "for sale" tonnage has negative implications for asset and equity values. More critically, it can easily lead to breaches in loan-to-value covenants at many dry bulk companies, shortening the cash runway and likely necessitating additional dilutive actions.

 

Dry bulk companies generally have enough cash for the next 1yr or so, but most are not well positioned for another leg down in asset values

 

The majority of publically listed dry bulk companies have already taken painful measures to adapt to the market- some have filed Chapter 11, others have issued equity at deep discounts, and most have tried to delay/defer/cancel newbuilding deliveries.

 

The additional cushion, however, is likely not enough if asset values take another leg down; especially given the majority of publically listed dry bulk companies are already near max allowable LTV levels.

 

The move to sell assets in unison can lead to a downward spiral, where the decline in values leads to an immediate need for additional equity to cure LTV breaches.

Source: Deustche Bank

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Thu, 01/07/2016 - 16:02 | 7012867 EscapeKey
EscapeKey's picture

3-2-1 until claims of overcapacity being the exclusive cause of this mentioned on cnbc...

Thu, 01/07/2016 - 16:30 | 7013055 Mr.Sono
Mr.Sono's picture

talk about limp index. That is a scariest chart i have ever seen. This is a major slow down.

Thu, 01/07/2016 - 16:35 | 7013086 OldPhart
OldPhart's picture

Are we going to get DIRP?  We'll pay you to ship something.

 

Let's put the BLS in charge of tracking...we'll have those numbers up in no time.

Thu, 01/07/2016 - 16:38 | 7013107 38BWD22
38BWD22's picture

 

 

Maybe we can get China to ship us, at their expense, bearings.

Maybe they will pay us to take them.

Upside down...

;-)

Thu, 01/07/2016 - 16:57 | 7013198 BKbroiler
BKbroiler's picture

DoChen, is that you?

Thu, 01/07/2016 - 17:01 | 7013213 Yen Cross
Yen Cross's picture

 It is. Do Chen is a good guy.

Thu, 01/07/2016 - 16:51 | 7013174 DownWithYogaPants
DownWithYogaPants's picture

D=????

D.I.R.P. == "D" Interest Rate Policy

Thu, 01/07/2016 - 18:45 | 7013879 OldPhart
OldPhart's picture

D = Dry

Thu, 01/07/2016 - 17:47 | 7013344 drivenZ
drivenZ's picture

There are no secrets in the Dry Bulk industry. The slaughter has been going on for years. The run up in the mid 2000's in commidty prices and chinese demand fueled a huge order book of ships. Lifespan for a ship is 30 years. With a systemic slowdown in China, there's just too many ships for the amount of cargo and there has been for many years now. It's a volatile index and is heavily dependent on supply. Not really a great leading economic indicator though and surely not a smoking gun for economic activity. 

Thu, 01/07/2016 - 20:29 | 7014408 AGuy
AGuy's picture

 We'll call this decline the dipship!

 

Thu, 01/07/2016 - 16:02 | 7012871 Automatic Choke
Automatic Choke's picture

that is the scariest thing you've showed me today, tyler.

Thu, 01/07/2016 - 16:53 | 7013170 nope-1004
nope-1004's picture

+1

Thu, 01/07/2016 - 17:39 | 7013232 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Wait til he sends you a nude pic of himself.

Thu, 01/07/2016 - 16:02 | 7012872 Soul Glow
Soul Glow's picture

New low everyday.

Thu, 01/07/2016 - 16:03 | 7012874 Dr. Engali
Dr. Engali's picture

Ship happens.

Thu, 01/07/2016 - 16:08 | 7012915 NoDebt
NoDebt's picture

I shipped my pants.

Thu, 01/07/2016 - 16:12 | 7012934 Dr. Engali
Dr. Engali's picture

One of the best commercials ever.

Thu, 01/07/2016 - 16:14 | 7012941 centerline
centerline's picture

Without a doubt.

Thu, 01/07/2016 - 16:19 | 7012975 two hoots
two hoots's picture

Ships belong in the water, a dry ship never carried squat.  News Flash:  put the ships in the water and move stuff.  the fix:  the Baltic Wet Index.  Geeze, no wonder these people can't make money.

Thu, 01/07/2016 - 17:05 | 7013236 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Wetting my pants, thanks.

Thu, 01/07/2016 - 18:56 | 7013958 Wulfkind
Wulfkind's picture

I just shipped my bed !!

Thu, 01/07/2016 - 16:13 | 7012939 centerline
centerline's picture

I shipped my bed.

Thu, 01/07/2016 - 18:57 | 7013963 Wulfkind
Wulfkind's picture

Sorry.....centerline.  Didn't see you there first.

Thu, 01/07/2016 - 16:12 | 7012936 mtndds
mtndds's picture

TRANSITORY

Thu, 01/07/2016 - 16:04 | 7012885 Make_Mine_A_Double
Make_Mine_A_Double's picture

Going to have to start benchmarking the god damn Phoenians.

Thu, 01/07/2016 - 18:57 | 7013967 Wulfkind
Wulfkind's picture

HAHHAHAHA !!    +1000

Thu, 01/07/2016 - 16:05 | 7012887 KnuckleDragger-X
KnuckleDragger-X's picture

Shiny, things are starting to get interesting now that all the bad numbers are starting to pile up. Almost ready to go to plaid.......

Thu, 01/07/2016 - 16:15 | 7012948 Global Hunter
Global Hunter's picture

barf

Thu, 01/07/2016 - 16:05 | 7012891 centerline
centerline's picture

Needs to adjusted for the weather.

Thu, 01/07/2016 - 17:06 | 7013241 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Yes El Nino again.

Thu, 01/07/2016 - 16:05 | 7012892 Ms No
Ms No's picture

It would be soooo funny if the market began to really shit the bed epic right at 3:30.

Thu, 01/07/2016 - 16:08 | 7012907 DetectiveStern
DetectiveStern's picture

Poetic justice

I was going to make a joke about Kevin Henry hitting the sell button by mistake then I remembered he doesn't have a sell button.

Thu, 01/07/2016 - 16:08 | 7012897 Yen Cross
Yen Cross's picture

 Baltic Fried! lol  We clearly need bigger ships to no-where?

 Gigantic cargo ship to call at Los Angeles port | 89.3 KPCC

  These clowns at CNBS are asses and elbows deep in Bull Shit!

Fri, 01/08/2016 - 06:15 | 7015903 OldPhart
OldPhart's picture

Ya know, if we loaded all those shipping ships with shippable shit we might not be in the quandry we're in.

Thu, 01/07/2016 - 16:06 | 7012898 Bunga Bunga
Bunga Bunga's picture

Free shipping!!!

Thu, 01/07/2016 - 16:08 | 7012916 o r c k
o r c k's picture

Free Ships !!

Thu, 01/07/2016 - 17:35 | 7013456 Dugald
Dugald's picture

 

Free shipping!!!

Joke away guys, but has anyone noticed that dirt cheap freight rates are not

being reflected in the price of goods, a bottle of, say, Scotch imported from

the UK is still full bore price on the shelf,

Fuck you Woolworth's, and others, you thieving bunch of shits.......

Thu, 01/07/2016 - 16:07 | 7012905 two hoots
two hoots's picture

Seriously, what could possibly turn this around?  Even if the CBs save the industries, there is no demand from consumers (that can afford demand).  I suppose we could go to sub-sub prime loaning to keep the Baltic Dry Index, dry but running?

Thu, 01/07/2016 - 16:10 | 7012923 Yen Cross
Yen Cross's picture

We clearly need to further reduce payrolls, and Cap-Ex, so that we can monetize our value through stock buybacks @Zirp.

 Especially on the last day of the month , or quarter...

Thu, 01/07/2016 - 16:15 | 7012944 two hoots
two hoots's picture

If that will work we should do it.  Thanks 

Thu, 01/07/2016 - 17:28 | 7013407 Panafrican Funk...
Panafrican Funktron Robot's picture

" I suppose we could go to sub-sub prime loaning "

Pretty much.  The high yield poop needs to keep flushing via new debt roll issues or the toilet gets stopped up. 

Thu, 01/07/2016 - 18:39 | 7013845 drivenZ
drivenZ's picture

less ships is the answer. Unfortunately there is little to no incentive to scrap or slow down new builds. 

Thu, 01/07/2016 - 16:08 | 7012910 o r c k
o r c k's picture

 Baltic Dry All Wet

Thu, 01/07/2016 - 16:11 | 7012927 wmbz
wmbz's picture

No need for ships anymore! Jeff Bezo over at Amazon sez he'll drone deliver everything!

See how simple it is. To many folks are over thinking this shit!

 

FUBAR

Thu, 01/07/2016 - 17:07 | 7013255 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Baltic Drone Index

Thu, 01/07/2016 - 16:12 | 7012933 Xatos
Xatos's picture

We're gonna need a bigger (scape) goat.

Thu, 01/07/2016 - 18:32 | 7013804 Villageidiot777
Villageidiot777's picture

Scapeboat if you will.

Thu, 01/07/2016 - 16:17 | 7012957 E.F. Mutton
E.F. Mutton's picture

The blood will flow tomorrow.  Or, some Fed wonk will make a noncommittal statement about QE to a hotdog vendor that somehow gets to CNBC and the market shoots up 400.  Go figure.

Thu, 01/07/2016 - 16:19 | 7012972 Osmium
Osmium's picture

At some point they have to stop the market slide to avoid margin calls.  Unless that's what they want.

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