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Baltic Dry Plunges 42% More Than Seasonal Norm To Start The Year

Tyler Durden's picture




 

Whether it is an over-abundance of ships (mis-allocation of capital) or a slowing global growth story (aggregate demand), the crash in the Baltic Dry Index has been significant to say the least. Seasonals are prevalent (and Chinese New Year impacts) but to try and clean up that perspective, we find that so far this year the Baltic Dry has fallen 42% more than its seasonal normal and is down by more than 50% since 12/30/11. Nothing to see here move along.

 

 

and on a log scale, this is indeed an impressive drop...

Chart: Bloomberg

 

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Thu, 01/26/2012 - 09:57 | 2099299 GeneMarchbanks
GeneMarchbanks's picture

From these levels a plunge like this is an absolute indicator of a trade war.

Thu, 01/26/2012 - 10:01 | 2099312 jcia
jcia's picture

MAYDAY MAYDAY

https://www.youtube.com/watch?v=gh5xu35bAxA

WE ARE SINKING!! WE ARE SINKING!!

on the other hand... currency war, trade war, REAL war. the question is WHEN?

Thu, 01/26/2012 - 10:34 | 2099391 Oh regional Indian
Oh regional Indian's picture

First time, in 08, it signalled the death of globalization. Ever since, it's been a sea of digital liquidity keeping global trade alive. It's pretty crazy howmuch money is being spent in India (F1 is here, Paris Hilton was here, Oprah just came and left)....to make people buy t-shirts and mugs...

No natural markets left for this end-gasp of the sell side world. All pump pump pump. Engines of export and import are both blowing thick, black smoke.

We are probably weeks away from something really nasty.

ori

/watershed-day-may-this-pour-through-

Thu, 01/26/2012 - 10:37 | 2099415 Stax Edwards
Stax Edwards's picture

Another nail in the coffin for Greece.  Stick a fork in em.

Thu, 01/26/2012 - 10:37 | 2099417 Manthong
Manthong's picture

Something, somebody, somewhere is going to pull the plug on this ponzi.

Thu, 01/26/2012 - 10:52 | 2099466 kridkrid
kridkrid's picture

Would you like to play a game?  How about, Global Thermal Nuclear War.

Gotta keep the secrets a secret.  Must not let people understand money.  Must make it seem like something else.  

Thu, 01/26/2012 - 12:33 | 2099833 Bananamerican
Bananamerican's picture

Harpex (tracks changes in freight rates for container ships) also has an interesting trajectory

http://www.harperpetersen.com/harpex/harpexRH.do?timePeriod=Years5&&data...

Thu, 01/26/2012 - 11:36 | 2099598 flattrader
flattrader's picture

ORI, are you a web bot watcher?

Occasionally they get the release language prediction correct, though it's not what people expect.

Now predicting near continuous and increasing release beginning in March 2012.  In past instances, the release language always declined over time.

Make of it what you will.

http://webbotforum.com/content.php?257-Article-Submissions

Thu, 01/26/2012 - 13:47 | 2100139 Oh regional Indian
Oh regional Indian's picture

yup flattrader, long termer here. I like it, zany and brilliant and the premise works for me, really well actually.

opri

Thu, 01/26/2012 - 15:34 | 2100568 YC2
YC2's picture

Its hard to say its really a demand issue in the context of the massive oversupply of ships, which if I remmeber correctly will not stop climbing for another year or two before scrap and new ships even out.  Good freight rates help importers, but commodity prices (fuel and cargo) have offset a lot of it.  Shippers were already in the red before the last down leg, I cant imagine what theyre doing now.

Thu, 01/26/2012 - 10:36 | 2099413 Melin
Melin's picture

gracias

Thu, 01/26/2012 - 10:30 | 2099400 Chief KnocAHoma
Chief KnocAHoma's picture

 

 While the World situation is so turbulent I watch in amazement, and thank God everyday to be living in such interesting times. No fear here baby, just excitement for what we are witnessing and living through is a birth.

Like a woman having contractions, one part of World screams in pain, then another. The contractions grow closer together, and any father knows what that means, get off the golf course and hurry to the hospital.

We all await to see what this new birth will bring.

Will it bring a revival of the human spirit where the real producers (people who work for a living) finally demand the non-producers (parasite bankers, trial lawyers, welfare riders) to pull there own weight? Or put more simply; No real work, no food.

Or might it bring the opposite. Maybe the non-producers will overwhelm the system and strip the productive of their hard earned wealth? Will farm lands be seized to provide for the State? Will your small trucking company be forced into servitude to carry goods to those that demand it? And if so how long can that last before someone has to produce?

Will the Christians remember that the events leading to the execution of Christ included him throwing money changers from the Temple? Are we about to toss them to street yet again, and what will be their response if we do?

Will the American electorate wake up and realize that voting for substance is more important than voting for style? One can only hope.

Will science save us? Will new energy forms break through to keep the World working and fed, or will the black gold run out forcing us back to a simpler life style? Would that be all bad?

Many sense a huge creative destruction on the horizon, but what? Jubilee? World War? Dark Ages?

Is it possible that what lies ahead, after some pain, could be the birth of a new reality where the scales are actually balanced as they should be? Could we be close to shedding the efforts trying to force utopia, thereby accepting that the World is not, and never will be perfect and fair for all? Trying to force this goes against the laws of nature and only causes wider spread suffering.

If we ever grow up and face that reality, we can move forward and develop an existence where freedom allows the producers to earn and thus willing provide through charity (And by that I mean giving more than 1% of your income or an embarrassing $369) to provide for the truly needy.

Believe it or not, we still have the power to chose our direction.

Remember this: The Republicans are not necessarily right, they are simply less wrong.

Thu, 01/26/2012 - 10:46 | 2099444 Flakmeister
Flakmeister's picture

The Republicans are completely fucking wrong on almost everything....Their fecklessness is responsible in no small measure the shitshow we are now experiencing...

The Democrats are a party of no good ideas, the Republicans are a party of bad ideas. 

Thu, 01/26/2012 - 10:59 | 2099489 kridkrid
kridkrid's picture

The "lesser of two evils" is still part of the same game.  Give people a false choice and make them think that their vote means something... that they are free.  It's a charade.  Wake up.

Thu, 01/26/2012 - 11:07 | 2099519 Chief KnocAHoma
Chief KnocAHoma's picture

I realize that my friend, but what choice does one have? Vote for a party you know is destructive, a candidate that can not win, or a party that is not quite as bad as the other (although still pretty bad).

Simply making the best choice of several bad choices.

Thu, 01/26/2012 - 11:18 | 2099551 tarsubil
tarsubil's picture

BS!

Thu, 01/26/2012 - 11:19 | 2099554 kridkrid
kridkrid's picture

What choice does one have?  Well for starters, don't be a pawn.  You are a pawn.  You provide the fuel needed to keep the charade alive.

Simply making the best choice of several bad choices

That's more of the same.  It's part of the scam to keep the sheep corralled.  Divide and conquer.  You're smart... I know a lot of smart people just like you who vote D.  If I wanted to carve out a rational sounding position to support the notion that the D's are the better of two bad choices, I could.  I could make equally rational sounding arguments for both sides... and that's the game.  The people pulling the strings watch the needle... move it back and forth... just enough.  It's easy.

Thu, 01/26/2012 - 11:24 | 2099564 tarsubil
tarsubil's picture

No one that is smart argues one party over the other today except shills who are in on it.

Thu, 01/26/2012 - 12:36 | 2099839 kridkrid
kridkrid's picture

I disagree.  I know lots of smart people who aren't "in on it" who are trapped.  Deprogramming isn't easy.

Thu, 01/26/2012 - 11:32 | 2099575 Chief KnocAHoma
Chief KnocAHoma's picture

@kridkrid - Again... I recognize that... but as yet no one has provided a reasonable solution.

Your point is similar to the Monday morning quarterback club when they snipe, "the coach called the wrong play" but refuses to suggest the proper play call.

What you suggest sounds like not even participating in the game, then we all lose. I know I don't control the rules, and that the game is rigged. I have loathing for those elected (on both sides) and respect for the electorate. So until you snipers propose a real workable solution: I STAND BY MY STATEMENT.

Thu, 01/26/2012 - 11:32 | 2099585 tarsubil
tarsubil's picture

As soon as the People don't participate in the game, then we all win. You and Flak's pathetic desperation in getting people to keep showing up is telling. The shills lose. The shills always lose!

http://youtu.be/O5epuPMf-7Y

Thu, 01/26/2012 - 11:38 | 2099605 Flakmeister
Flakmeister's picture

Don't you have to run and check the temperature of your bath water??

Do you have any more nuggets of scientific understanding that you would like to share with us??

I haven't laughed like that in a long time...

Thu, 01/26/2012 - 11:57 | 2099674 tarsubil
tarsubil's picture

So taking the temperature of the Earth is equal to taking the temperature of water in a bath tub? Yes, I am embarrassed by my scientific understanding.

Flak, Let's talk about you for a second. You apparently squirrelled away over a million dollars worth of gold over decades of making money through the government research grant con game and now you pretend to believe in part of the government con game. You are like someone who invested with Madoff for years then cashed out while continuing to tell people to invest in Madoff. No one does what you've done and still believes in the con game. You are a shill on par with any con artist at Goldman Sachs or Congress.

Thu, 01/26/2012 - 12:05 | 2099716 Flakmeister
Flakmeister's picture

I went from academia to Wall St....

Personally invested in long dated oil futures back in 2005... (my analysis showed the Peak Oil was rumbling down the pike...)

Made a fucking killing and am now retired (at 48) working on getting my handicap to single digits...I do some wealth management on the side....

That's my story... Deal with it and go learn some science....

Thu, 01/26/2012 - 12:18 | 2099758 tarsubil
tarsubil's picture

Went from one con game to another. Won the lottery. Now have to justify good fortune. That's even better. Who knew all scientific knowledge came from lowering your handicap? How much time did you actually spend at the bench? Did you go to Wall Street because someone tried to duplicate your data and your grants started to get denied? This is truly a fascinating story.

Yeah, yeah, you made money because you figured it all out. Keep telling yourself that.

Thu, 01/26/2012 - 12:19 | 2099777 Flakmeister
Flakmeister's picture

I do detect more a just a bit of jealousy on your part....

Ta-Ta for now....

Thu, 01/26/2012 - 12:28 | 2099813 tarsubil
tarsubil's picture

Haha! Where do you detect jealousy in what I said? Right.

Hey, did anyone try to duplicate your results? Are you afraid of even checking? Is your time at the bench something you'd like to forget?

Thu, 01/26/2012 - 11:41 | 2099617 Chief KnocAHoma
Chief KnocAHoma's picture

And here I thought the follow up post would be predicting the creative destruction event. Instead the anarchist are bitching about a rather benign statement about Republicans being a mushroom on a Democratic turd.

 

Thu, 01/26/2012 - 11:59 | 2099685 tarsubil
tarsubil's picture

The opposite of tyranny is liberty not anarchy. Only someone in on the con would make the argument that we must choose between levels of tyranny or suffer anarchy while ignoring the liberty option.

Thu, 01/26/2012 - 12:12 | 2099718 Chief KnocAHoma
Chief KnocAHoma's picture

My friend by dropping out and sitting around while your dreadlocks grow, you are inviting tyranny.

One day everyone in fight club will learn - Don't fuck with Chief. He punches really hard.

Thu, 01/26/2012 - 12:20 | 2099778 tarsubil
tarsubil's picture

"One day everyone in fight club will learn - Don't fuck with Chief. He punches really hard."

Are you joking? Only kittens brag about how hard they hit online.

Thu, 01/26/2012 - 13:38 | 2100094 Flakmeister
Flakmeister's picture

There you go... see, we can agree on a few things....

Thu, 01/26/2012 - 11:45 | 2099628 kridkrid
kridkrid's picture

All you are doing is receiting things that you've heard said, over and over.  You've heard it so often that it must feel like warm blanket.

So until you snipers propose a real workable solution: I STAND BY MY STATEMENT.

A solution to what?  What is the "problem" for which you demand our politicians create a "solution"?

Thu, 01/26/2012 - 11:56 | 2099663 Chief KnocAHoma
Chief KnocAHoma's picture

@kridkrid - Try to keep up son. I do not propose politcos provide any solution. I am simply requesting you make a play call rather snipe at mine.

It is easy to say everyone is wrong and take no position. It is also cowardly.

Thu, 01/26/2012 - 12:10 | 2099737 kridkrid
kridkrid's picture

Take a position on what?  See... here is the game they are playing with YOU.  They have created a false choice for you.  You must choose A or B... if you don't choose A or B, your are coward.  Right?  That is what you are telling me.  And you are asking for a solution... I think these are your words, not mine... "So until you snipers propose a real workable solution"

You are trapped in a box of their design.

So... my questions for you are simple...

  • on what would you like me to take a position (your suggest that I won't take a position... I'm seeking clarity)
  • on what wouldd you like me to propose a workable "solution"
Thu, 01/26/2012 - 13:29 | 2100041 viahj
viahj's picture

he plays the game of "lesser of two evils" (A or B)

you call him an idiot and tell him not to participate in their game

he then asks you what you solution is to the system because simply not participating in the A or B game will not solve our problems

Thu, 01/26/2012 - 14:20 | 2100272 hedgeless_horseman
hedgeless_horseman's picture

 

 

I vote against incumbents, especially lawyers disguised as judges.

Switching costs, bitchezzz.

Thu, 01/26/2012 - 12:03 | 2099711 dtwn
dtwn's picture

At this point it seems quite a lot of ZH readers/commenters agree that the system is broken and that a vote for either Obama or a republitard is a vote for more of the same.  Even though Ron Paul has some great ideas and would be less of the same, I simply don't see him being electable.  

With that said, it also seems that many of us are aware or think that some sort of endgame is approaching for both the world and America.  Who knows what the timeline of this endgame is, Kyle Bass thinks 3-5 years for America and I think I agree, I'll say it'll be 4 years, by the end of the next election cycle.  Hopefully Americans will be completely fed up by that point and be ready to vote for real change.  Hopefully a candidate will emerge by then to deliver.

So my question at this point is:  Will it be Obumma or one of the republicans that brings us to the endgame (whatever it may be) the quickest?

I tend to think that either Mitt or Newt will accelerate all that is wrong with America and bring us to the endgame faster.  Big changes are ahead that WILL happen and NEED to happen, so I say vote Republican and get this over with.  Then in another 4 years, after 16 years of serial dissatisfaction with both parties, hopefully we'll be able to have some REAL change in this country.

Thu, 01/26/2012 - 12:32 | 2099828 kridkrid
kridkrid's picture

Well... we need to define what the end is.  It could be peak oil, or the end of dollar hegemony, or both.  The "end" for both is purely mathmatical and fast approaching.  Something new lies on the other side.  I don't think our current political debate effects the timeline for either.  Here is a fantastic hour of enlightenment, when you have the time: http://www.goldmoney.com/video/martenson-presentation.html

Thu, 01/26/2012 - 12:17 | 2099768 mvsjcl
mvsjcl's picture

Making no choice is making a choice. Simple.

Thu, 01/26/2012 - 11:10 | 2099528 tarsubil
tarsubil's picture

This is where we are. The Reps and Dems are reduced to saying:

Democrat shill, 'The Democrats are the party of the opposite of good ideas, the Republicans are the party of bad ideas.'

Republican shill, 'No! The Republicans are the party of the opposite of good ideas, the Democrats are the party of bad ideas.'

The Dem vs Rep bs has jumped the shark.

Thu, 01/26/2012 - 17:57 | 2100980 Blank Reg
Blank Reg's picture

People. When you choose the lesser of two evils:  YA STILL GET EVIL!

Thu, 01/26/2012 - 10:57 | 2099483 kridkrid
kridkrid's picture

I down voted you.  While I didn't agree with all of what you wrote, I was on board with most of what your wrote... until your very last sentence.  The belief that either party provides a path out is part of the box that keeps us in.  Wake up.

Thu, 01/26/2012 - 11:07 | 2099520 tarsubil
tarsubil's picture

Oh man! What a giant turd on an otherwise great statement. The upvotes probably didn't make it to the giant turd at the end.

Thu, 01/26/2012 - 10:59 | 2099488 whoisjohngalt11
whoisjohngalt11's picture

Amen Chief ... like yer soap box , when used rightly pain can become gain right ??

Thu, 01/26/2012 - 11:03 | 2099506 kridkrid
kridkrid's picture

John Galt would have utter contempt for the Republican Party, I would think.  Crony capitalism and finance fascism... that's what both parties offer.  He destroyed an otherwise reasonable post by suggesting that the R's deserve your support.

Thu, 01/26/2012 - 11:20 | 2099556 Flakmeister
Flakmeister's picture

Another way to put it...

Name one bit of major legislation with Republican sponsers in the past 40 years that has not led to a disaster?

Gramm-Leach?

Gramm and the CFTFC act?

Deregulation of the Media?

Patriot Act???

Deregulation of almost any industry? (Enron anyone??)

No Child pushed ahead??

TARP??? (Remember it was Paulson that came begging)

-----

Look piss on the two parties but face facts, the Republicans have been absolutely feckless.... whereas the Dems have been incompetent...

Thu, 01/26/2012 - 11:34 | 2099591 kridkrid
kridkrid's picture

I don't think people don't understand how our regulatory bodies work or what they are designed to do.  Our gov't is captured by our corporations.  There isn't a party who does anything other than provide lip service to an idea that this is wrong.  Look at the picture of the all of the rich dudes smiling away as BILL CLINTON signed the Banking Modernization Act.  And the "compromise" that pushed the bill ahead... another win for the banking oligarchs, providing another stream of debt creation with the CRA (privitize the profits... eventually make loses public).  CFTC - If I'm not mistaken... Sen Tom Harkin was one of the sponsers.  Frank and Dodd????  Ring bells?  Patriot Act... NDAA.

American politics is EVIL.  Not feckless or incompetent... EVIL.  Both side, equally.

Thu, 01/26/2012 - 11:43 | 2099622 Flakmeister
Flakmeister's picture

This is where we differ, the Repubs take the cake when comes to screwing the middle class...

Clinton may have signed it but it was written and pushed through Congress by Phil Gramm. Phil Gramm will be mentioned in the same breath as John Law in any future History of Economics books...

Anyway, if you guys think that this is somekind of backhanded defense of the Dems, you are mistaken. Republican policies and ideology has led to the greatest generation of kleptocrats ever seen....And the Democrats were too fucking stupid to see what was coming....

 

Thu, 01/26/2012 - 11:57 | 2099676 kridkrid
kridkrid's picture

Phil Gramm - Clearly evil.  But the belief that he acted alone is completely naive.  I would put Chris Dodd on equal footing with Phil Gramm any day of the week.

IMO... the two parties are both wolves... but depending on how you are aligned... they are in sheeps cloathing.  The R's provide the right rhetoric to connect with the segmented part of the population inclined to see them as virtuous.  The D's provide the right rhetoric to connect with the segmented part of the population inclined to see them as virtuous.  And so it goes.  

Thu, 01/26/2012 - 12:00 | 2099695 Flakmeister
Flakmeister's picture

Yes... there are corrupt and "evil" Dems....

I was going to qualify my statement about stupid Dems to be that some fraction were too stupid to see what was going on, some fraction were complicit and the the ones that saw it coming were shouted down with slanderous arguments....

 

Thu, 01/26/2012 - 12:04 | 2099713 tarsubil
tarsubil's picture

You are wasting your time with Flak. Most if not all of his arguments are disingenuous.

Thu, 01/26/2012 - 12:21 | 2099764 Flakmeister
Flakmeister's picture

My word.... coming from you, that is absolutely fucking hilarious....

Why don't you go off and fantasize about your make-belief world while the rest of us take a hard pragmatic look at the real one....

Thu, 01/26/2012 - 12:46 | 2099818 tarsubil
tarsubil's picture

So I'm being disingenuous? Do you know what disingenuous means?

Thu, 01/26/2012 - 13:37 | 2100083 Flakmeister
Flakmeister's picture

Yes....

Fair enough, you may not be disingenous, that requires a modicum of understanding, which rules you out...

Thu, 01/26/2012 - 14:15 | 2100264 tarsubil
tarsubil's picture

I need to document this. You admitted you were wrong on something.

Thu, 01/26/2012 - 14:38 | 2100365 Chief KnocAHoma
Chief KnocAHoma's picture

flakmeister = one angry dude

Thu, 01/26/2012 - 11:46 | 2099629 flattrader
flattrader's picture

>>>providing another stream of debt creation with the CRA<<<

What horseshit.  The worst actors in this debacle like Countrywide weren't subject to CRA.

A few sub-prime mortagage originators (Countrywide) signed on to community lending agreements to sucker low-income people into their operations and steer them away from banks that had bonafide programs and loans that weren't for shit.

Do some homework.  Get a clue.

Thu, 01/26/2012 - 12:02 | 2099706 kridkrid
kridkrid's picture

I've done my homework.  I'm not the neaderthal who wants to blame poor people and the CRA for what has transpired.  In fact, housing is merely one of the rungs in the global fiat ponzi scheme... not the catalyst for collapse that people want to make it out to be.  My point was... even what appears to be "compromise" isn't compromise.  It's called regulatory capture.  Every card played benifits the few at the expense of the many.  Do you really think someone like Barney Frank gives a sh-t about poor people?  Please.  Do you think the president is driven by altruism?  

Thu, 01/26/2012 - 11:40 | 2099615 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

 

 

Total bias against the Repubs and for the Dems.

One Dem bad idea was LBJ's "Great Society". Difficult to quantify, but certainly in excess of 12-13 Trillion and some estimates are "tens of trillions". It destroyed the black families and ruined major cities (like New Orleans). Certainly without this program alone the U.S. of A would be a far better place.

A pox on BOTH their houses!

I am biased against BOTH the Repubs and the Dems.

It took a team effort to totally ruin this country and much of the world.

Thu, 01/26/2012 - 10:36 | 2099411 Miss Expectations
Miss Expectations's picture

Go Back to your cabins (or, if you wish, to stay in the corner by the lounge).

http://www.youtube.com/watch?v=gXV1uSb-5_c

 

Thu, 01/26/2012 - 10:04 | 2099327 SheepDog-One
SheepDog-One's picture

And yet all people care about is green stocks. I never believed it would be THIS easy to pull off the greatest transfer of wealth in history...people can be bankrupted, foreclosed on, and fired, and they dont mind as long as their 401K is green. Apparently.

Thu, 01/26/2012 - 10:20 | 2099376 fonzannoon
fonzannoon's picture

I suppose if everyone became day traders it would be problem solved.

Thu, 01/26/2012 - 10:57 | 2099479 I Got Worms
I Got Worms's picture

As the sheep sleep,

the new world order creeps.

 

with apologies to the Limerick King. :-)

Thu, 01/26/2012 - 13:38 | 2100091 viahj
viahj's picture

the masses are motivated by hunger, fear of emminate death or total loss

we are nowhere near this yet in America (on a large scale), thus it is still up to "sheep dogs" to protect the flock from the wolves and not to abandom the flock to danger or to become a wolf as well.

Thu, 01/26/2012 - 10:21 | 2099380 tarsubil
tarsubil's picture

Don't you need trade for that?

Thu, 01/26/2012 - 10:27 | 2099394 midtowng
midtowng's picture

It looks like a reflection of the collapsing Euro market economies.

Thu, 01/26/2012 - 09:58 | 2099300 trampstamp
trampstamp's picture

some fools will try to down play this and make it out to be rosie

Thu, 01/26/2012 - 09:58 | 2099303 Temporalist
Temporalist's picture

Gold you're a bad bad girl...bad!

Thu, 01/26/2012 - 09:59 | 2099305 Temporalist
Temporalist's picture

I meant; I blame pirates.

Thu, 01/26/2012 - 10:13 | 2099357 disabledvet
disabledvet's picture

Which one's? The Pirates of the Carribean or the Pirates of Penzance?

Thu, 01/26/2012 - 10:21 | 2099379 Temporalist
Thu, 01/26/2012 - 11:12 | 2099533 BigInJapan
BigInJapan's picture

Space herpes!

Thu, 01/26/2012 - 09:59 | 2099304 mkanterm
mkanterm's picture

Remember that shipping fuel prices have been sky-rocketting, definitely an effect on the baltic dry index. I need to overlay these to see what it looks like

Thu, 01/26/2012 - 10:09 | 2099344 LawsofPhysics
LawsofPhysics's picture

Please do and post, I was thinking the same thing. One wonders why shipping can not become more efficient by making sure all ships are packed to the max, but even this might not be enough considering that you still only get a fixed amount of energy out of the fuel.  By yes, is this really a reflection of less demand, poor management, or simply the thermodynamics of it all.

Thu, 01/26/2012 - 10:29 | 2099398 cowdiddly
cowdiddly's picture

well you can add another level of oarmen to the Triremes so they can paddle faster.

Thu, 01/26/2012 - 10:20 | 2099375 chinaguy
chinaguy's picture

Bulk shipping is fairly inelastic because it is always the cheapest way to move low margin materials.

And, all shipping contracts have "fuel surcharge" clauses that allow them to cover their costs over the life of the contract. Of course, increased shipping costs have some impact on quantity shipped, but in this case, it would be the decision to ship or not ship.

I'd say that this large swing in the index, along with the moderate drop off in containers in LB, LA point to less stuff being shipped here.

Thu, 01/26/2012 - 12:15 | 2099755 graymnzrc
graymnzrc's picture

You would think that higher fuel costs would increase the BDI, aside of course from any fuel sur-charges.

From a report this morning, it looks like the L.A. port is losing business to South Carolina and Virginia ports. So some of thier unused capacity may be to competition instead of global activity. That is why L.A. is fighting the widening of the Panama Canal. Apparently some ships are too big to go through and must unload in L.A.

I believe it was Virginia and South Carolina anyway. The gist of the report was that they are both clamoring for federal money to deepen thier ports. I guess everyone wants to be able to handle the bigger boats.

Thu, 01/26/2012 - 12:33 | 2099832 pierre66
pierre66's picture

I am a 747 cargo pilot based in Shanghai.

We came into Pudong this morning at 0500 from Anchorage.

I have NEVER in my 25 year career seen so many ships parked offshore in the East China Sea as this morning, at least 250 large vessels. Could be New Years build up and they are waiting to offload/load, I don't know - or the DBI is accurate.

Our air freight loads to the USA have been decent but I understand the yields are very low and my carrier (a Chinese SOE) is losing 10-12 million USD per month right now and has been since last fall.

Thu, 01/26/2012 - 13:50 | 2100150 kridkrid
kridkrid's picture

Thanks for posting.  Sometime in the very near future, posts like yours will be the only source of news available (and the future may actually be now).

Thu, 01/26/2012 - 11:05 | 2099513 Nachdenken
Nachdenken's picture

Months before the 2008 Baltic drop, land transport (sales of trucks and heavy trailers) dropped as well, in Europe falling Scania truck sales were a leading negative indicator. When transport goes down so swiftly and so deep, trade by sea - a high percentage from China, Japan and India on one side, from South Americas on the other - is a leading indicator of trade downturn. 

Thu, 01/26/2012 - 09:59 | 2099306 Flakmeister
Flakmeister's picture

If the BDI is so far underwater, at some point it must become wet? No? 

Thu, 01/26/2012 - 10:04 | 2099328 falak pema
falak pema's picture

lol, well said.

Thu, 01/26/2012 - 10:05 | 2099331 Temporalist
Temporalist's picture

Who's manning this vessel? Can it be Francesco Schettino?

Thu, 01/26/2012 - 10:21 | 2099366 Zero Govt
Zero Govt's picture

dunno about harsh real world economics like trade..

...but this is probably very bullish stocks and T-bills

Back to deranged institutionalised induced euphoria please, let's not prick Bernanke Bubblenomics

Thu, 01/26/2012 - 10:00 | 2099307 LawsofPhysics
LawsofPhysics's picture

Leading index?  

Thu, 01/26/2012 - 10:00 | 2099308 Schmuck Raker
Schmuck Raker's picture

That is one confusing graph.

Thu, 01/26/2012 - 10:01 | 2099313 Stuck on Zero
Stuck on Zero's picture

When the Baltic rates fall sufficiently you'll see a sudden rash of maritime "accidents".  An amazing coincidence.

Thu, 01/26/2012 - 12:40 | 2099851 Bananamerican
Bananamerican's picture

why don't they just park them in the desert like jetliners???

oh wait

Thu, 01/26/2012 - 10:02 | 2099315 Gubbmint Cheese
Gubbmint Cheese's picture

Going down line an italian cruise ship..

Thu, 01/26/2012 - 10:03 | 2099317 fonzannoon
fonzannoon's picture

How would one reconcile this with say Caterpiller's results today?

Thu, 01/26/2012 - 10:03 | 2099319 Executioner
Executioner's picture

This is amazing. Stock markets has lost any correlation with BDI.

Thu, 01/26/2012 - 10:35 | 2099408 andyupnorth
andyupnorth's picture

Seriously, the decoupling happened a couple of years ago, and now we're just living in Fantasy Land.

So when/how will they recouple?

Thu, 01/26/2012 - 10:47 | 2099449 andyupnorth
andyupnorth's picture

Now that I think about it:

During the  the tight corellation era, it seemed to make sense that as stocks went up, companies were "richer" and could pay more for shipping, thus BDI went up accordingly.

Now, during the decoupling, it seems to make sense that since BDI is dropping, companies are paying less for shipping, thus increasing their profits and the stock market goes up.

So how can both arguments be correct?  IMHO, the decoupling was cause by QE, which somehow caused this paradigm shift. (If anyone could rationalize this phenomenon, I would be much obliged).

But in the end, I think everyone doubly benefits from combination of rising stocks AND lower shipping prices... except the shipping companies, who are simply breaking even...

ZH'ers, feel free to correct any logical fallacies you notice from these arguments.  Thanks!

Thu, 01/26/2012 - 11:05 | 2099512 Eally Ucked
Eally Ucked's picture

First of all BDI is index for shippers of raw materials, coal, ore, grain. This index can tell you that China and India are not buying as much as in the past. Producers of above commodities should worry now and probably their stocks will tank for some time.

Thu, 01/26/2012 - 12:39 | 2099847 andyupnorth
andyupnorth's picture

So China/India are not buying as much -> implies that global consumption is going down

-> also implies that whatever is being produced and sold has increasing profit margins

... so breaking even for companies producing finished good?

... but bad for mining companies?

Thu, 01/26/2012 - 10:03 | 2099320 falak pema
falak pema's picture

Anybody who names his index "dry" needs his head examined. I prefer "wet", "humid", "hot", "burning" to "dry"; unless its about white wine and fine brandy.

Of course, I prefer by large my containers to be full than empty and dry, just like my fresh oysters. Even the Somalian pirates hate the idea of capturing a container ship with all dry containers...understandably, they learn fast from their banksta icons of "greed is good" land. 

Thu, 01/26/2012 - 10:05 | 2099323 dwdollar
dwdollar's picture

Where is the ship number and % increase over the past few years? That would be interesting to know.

Thu, 01/26/2012 - 10:06 | 2099326 DannyTX
DannyTX's picture

Don't worry.  There will be plenty of Caterpillar equipment to ship. 

Where are the results of all the recent bearish news?  The news lately has been much more bearish than bullish.  This market looks like the EverReady Bunny. 

 

Thu, 01/26/2012 - 10:08 | 2099342 SheepDog-One
SheepDog-One's picture

True, but no one cares, americans have been trained that 'all is well' as long as stocks are green. I never would have believed people wouldnt mind being layed off in record numbers, all time high foreclosures and bankruptcies, as long as the DOW was up. Amazing the Neandersheeple are.

Thu, 01/26/2012 - 11:27 | 2099568 BandGap
BandGap's picture

This lack of "caring" only widens the gap and makes the divide between the haves and have nots even more obvious. 

The question to really ask is what would you do if you did feel compelled to do something? It isn't so much as a lack of caring as it is a growing sense of hopelessness.

Thu, 01/26/2012 - 10:05 | 2099332 LouisDega
LouisDega's picture

Son: Dad, Whats a Baltic dry?

Dad: Its a drink i ordered at the bar last night. Dont tell your mom

Thu, 01/26/2012 - 10:08 | 2099343 Mitch Comestein
Mitch Comestein's picture

So when does FRO and some of the other debt bloated shippers go belly up.  You would have to be out of your mind to be holding those stocks.

Thu, 01/26/2012 - 10:11 | 2099350 monopoly
monopoly's picture

DRYS GNK reflect the above charts. Just ignore it. World trade. We do not need it. We have The Bernank.

Thu, 01/26/2012 - 10:12 | 2099351 Tense INDIAN
Tense INDIAN's picture

Tyler why should the Traders take that seriously ....if it came down it will also go up...seems like it doesnt effect stock or credit markets ......

Thu, 01/26/2012 - 10:15 | 2099362 Irish66
Irish66's picture

In the good old days, it used to matter

Thu, 01/26/2012 - 10:24 | 2099385 SheepDog-One
SheepDog-One's picture

Its what Fascism looks like. But oh well, the avg american likes it as long as stocks are green, nothing else matters.

Thu, 01/26/2012 - 10:18 | 2099369 ucsbcanuck
ucsbcanuck's picture

BDI at 753 now.

Economic BMI to follow soon?

Thu, 01/26/2012 - 10:18 | 2099370 AU5K
AU5K's picture

All is fine, please avert eyes and continue buying stocks.  There's just an oversupply of ships.  Or something.

Thu, 01/26/2012 - 10:18 | 2099371 disabledvet
disabledvet's picture

Air freight's still moving. Given the focus on fuel costs that should not be the case. Perhaps a focus on economics vis a vis product lines and final demand is in order...

Thu, 01/26/2012 - 11:05 | 2099516 americanspirit
americanspirit's picture

Air freight handles high margin JIT stuff like electronic components that can absorb high shipping costs; bulk cargo handles low margin stuff that is not time-sensitive and has little room to handle increased shipping costs. Hence - air cargo remains high, for now, and bulk cargo is dropping off a cliff. 

Thu, 01/26/2012 - 10:19 | 2099372 kralizec
kralizec's picture

HARPEX has been trending down as well.

http://www.harperpetersen.com/harpex/harpexVP.do

Thu, 01/26/2012 - 10:19 | 2099373 Dick Darlington
Dick Darlington's picture

No worries, Beard Monkey can print it back up in 15 minutes!

Thu, 01/26/2012 - 10:20 | 2099374 Dr. Engali
Dr. Engali's picture

Damn bloody pirates!

Thu, 01/26/2012 - 10:21 | 2099377 Flakmeister
Flakmeister's picture

We have been through this already.... there is massive overcapacity in the dry bulk carrier segment of the market... 

The weak hands must fold before any bounce is to be had, assuming cargos stay flat...

It is even worse in the tanker sphere....

The only carriers with pricing power currently is LNG....

Thu, 01/26/2012 - 11:00 | 2099493 Iam_Silverman
Iam_Silverman's picture

"there is massive overcapacity in the dry bulk carrier segment of the market... "

I have heard this argument before.  Not only is there (supposedly) a glut in the number of all size ships (cape size, maxx, etc) there are several more currently being built as the contracts are too far along.  I have seen the pictures of large fleets of bulk carriers moored in far-flung places, essentially idled while waiting for an uptick in demand or prices paid.

Is there any way to overlay the BDI graph against bulk shipping tons worldwide?  If it shows that actual tonnage is down, then I would see the correlation.  If it shows tonnage flat or rising, then I would expect to see lower prices for finished goods as input costs are lowered.

Thu, 01/26/2012 - 13:18 | 2099991 falak pema
falak pema's picture

One point that should be kept in mind is that sea transport consumes less energy per ton than plane and truck. Only rail is better IMO. This is a factor that will play its role. But in the SHORT term imagine what this back log of investment with Looooong payout times now means to the banks financing downside and BSs; all initiated in a bull scenario of global growth; if it goes sour n bearish  big time in 2012/2013...

Thu, 01/26/2012 - 13:21 | 2100003 Flakmeister
Flakmeister's picture

Small quibble... per tonne by sea is the cheapest....

Thu, 01/26/2012 - 10:21 | 2099381 rsnoble
rsnoble's picture

Just keep those lights flashing green all the way to nuclear hollocaust. Which will also be bullish from all the activity to rebuild that will boost the GDP.

Thu, 01/26/2012 - 10:26 | 2099389 SheepDog-One
SheepDog-One's picture

All bullish. Think of all the extra saving when millions of people are vaporized and no longer need an unemployment check or food stamp cards! 

Thu, 01/26/2012 - 10:31 | 2099401 SmoothCoolSmoke
SmoothCoolSmoke's picture

Not as funny as it sounds.  I'm starting to believe TPTB are buying time until they can find a way to have 1/3 to 1/2 of humanity (excluding them of course) "die off".  Truth is that is probably the only real "reset" that can let the planet move forward.

Thu, 01/26/2012 - 10:25 | 2099387 azzhatter
azzhatter's picture

And Bernanke continues to ass rape the savers and the sheeple apparently like it. I hope that bearded fucker dies a horrible painful death

Thu, 01/26/2012 - 10:27 | 2099393 SheepDog-One
SheepDog-One's picture

They do like it, so really as the Bernank ass rapes the currency and any savers, the sheeple get what they deserve later, I wont have any sympathy when theyre all wiped out one morning.

Thu, 01/26/2012 - 10:27 | 2099392 SmoothCoolSmoke
SmoothCoolSmoke's picture

Hmmmm, seems in 2008 stocks fell along with the BDI or vice versa. So looks like the BDI has joined everything else and "deleveraged" from equities.  Or, more simply, equites have "deleveraged" from non-Fed reality.

Fri, 01/27/2012 - 20:05 | 2104355 Mentaliusanything
Mentaliusanything's picture

Do you think that may be a result of ZIRP and QE pushing investment into risk assets.

It Bens wet dream but his reward will be a sticky letdown.

We of course will have to do the sheets

Thu, 01/26/2012 - 10:37 | 2099418 ILoveTheWorld
ILoveTheWorld's picture

This is ridiculous. On a long scale the BDY is at the levels it always were.

You just need to remember that 2004-2008 was the exception.

Thu, 01/26/2012 - 10:48 | 2099453 g speed
g speed's picture

which would mean the years 2004-2008 were bubble levels???? who'd a thought???

Thu, 01/26/2012 - 13:20 | 2099475 falak pema
falak pema's picture

Can you give me a link to the period 1995-2003 ? To make the historical picture more in line with my own experience?

I wonder if a long history chart site for Baltic Dry exists. I can't find it.

Found it here in a great historical paper on transport costs :

http://richardgilbert.ca/Files/2006/Globalisation%20(Web).pdf

Interesting the BDI ups and downs : 01/1987 : 700; 01/1994 : 1200;  01/ 1995 : 2300+;  01/1999 : 800 !;  01/2003 : 2300. 

So, since 1987  it fluctuated between 2300 and 700, hitting a consistently average higher plateau from 1995... and today it is at  : 800? (like 01/1999).

Conclusion : the 2006-2008 (early) period is historically absurd, on a 5000+ plateau, after an already hi plateau during 1995-2005. Globalisation gone mad! 

Thu, 01/26/2012 - 10:57 | 2099480 adr
adr's picture

Yes but stocks are going right back up to 2007-2008 levels. Right back to levels last seen during the biggest bubble of the last couple hundred years. If support for the stock market was real, then all other indicators should actually be higher than 2007-2008 due to growth in the economy. My theory is that since Obama gave wal street a pass on all criminal activity and allowed mark to fantasy to rule accounting, every major public corporation has been faking, sorry "overstating", earnings by 20% of more every quarter. The government is purchasing goods directly through shell corporations to pump up manufacturing numbers. Effectively goods to nowhere. 

Thu, 01/26/2012 - 14:46 | 2100403 walküre
walküre's picture

Sorry, that's too simple. The BRIC had tremendous growth during that time. Last I heard China had not admitted to a major contraction but according to the BDIY correction, there should be. The Chinese "hard landing" has always been discussed as the apocalypse of world trade and today I think we're one step closer to that reality.

How can China's economic output supposedly grow 10% yoy, the Dollar relatively strong, oil at or near $100 and the BDIY loosing 60% since October '11?

Something's a myth (as opposed to a miss).

Fri, 01/27/2012 - 12:19 | 2102677 ucsbcanuck
ucsbcanuck's picture

The FT brought up the same issue:

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100014380/china%E2%80%99s-very-mysterious-data/

"The Baltic Dry Index measuring freight rates for ores, grains, and bulk goods, has fallen 44pc over the last year. Kasper Moller from Maersk in Beijing said weak Chinese demand for iron ore was the key culprit."

Thu, 01/26/2012 - 10:50 | 2099447 Sudden Debt
Sudden Debt's picture

 

 

THE GREEKS SHOULD BRING OUT THEIR TRIRINES!!

ROW THAT BEAT BITCHEZ!!

cheaper to transport. It runs on human caddle and Greece has enough of those who will rowe for food.

To bad the rest of their shipping industry is going down the shitter with shipping rates like this.

Row.... row.... row that boat.... gently down the waterfall....

 

Thu, 01/26/2012 - 10:49 | 2099457 Georgesblog
Georgesblog's picture

Loan sharks only care about their economy, not yours. they don't allow anyone to look for a better deal, either. It's a strange set of circumstances that give people good reason to want to see a global collapse. Perhaps a commodity driven currency would set the thieves in their place. Exchange rates set by real things would take a lot of the wiggle room out of the Ponzi. Hard goods becomes the currency and the paper follows that. Turn the shills and shysters into beggars.

 http://georgesblogforum.wordpress.com/

Thu, 01/26/2012 - 11:00 | 2099491 Ullage_Report
Ullage_Report's picture

Too much newbuilding. Shipping is a risky business. Loveworld is right, the most recent up-cycle was an anomaly. Even scrapping rates are elevated now. Ship classes grow in size and change over time. The BDI isn't as reliable a leading indicator as the CRB-Spot.

Thu, 01/26/2012 - 14:53 | 2100423 walküre
walküre's picture

Apparently they overbuilt ships just like the Chinese built ghost cities and ghost malls.

Demand and therefore prices for base metals and materials was artificially high over the last 3 years.

NOW comes the real correction when the world economy is out of steam, nations are at their debt-wits end and consumers w/o decent paying and safe jobs have been forced to austerity.

Neither ZIRP nor QE will do anything for demand. We're still deflating.

Fri, 01/27/2012 - 20:16 | 2104393 Mentaliusanything
Mentaliusanything's picture

Golf hand clap for understanding the manic-depressive World we have become.

Debt fuelled growth is the same as lighting a fire with Alcohol. Baby you get it going but only till you run out. Then you wish you had kept it to survive.

Thu, 01/26/2012 - 11:02 | 2099499 Zymurguy
Zymurguy's picture

Doesn't matter... the current administration is doing anything they possibly can to drive the DOW back up to 14K come election day.

Thu, 01/26/2012 - 14:01 | 2100205 NotApplicable
NotApplicable's picture

I'm getting the feeling that Buffet is going to buy a shipping company for pennies on the dollar before this is all over.

Thu, 01/26/2012 - 11:18 | 2099552 mess nonster
mess nonster's picture

After you wake up from your fantasy, how are you going to implement this badly-needed reform?

Burn, baby, burn! Nihilism is the last hope when one discovers all the exits have been blocked.

Thu, 01/26/2012 - 11:21 | 2099560 freakscene
freakscene's picture

Other than Larry Kudlow, I didn't think anyone else ever paid much attention to the BDI.

Thu, 01/26/2012 - 11:28 | 2099571 fuu
fuu's picture

Lookingwithamazement going to chime in here?

Thu, 01/26/2012 - 11:29 | 2099574 LookingWithAmazement
LookingWithAmazement's picture

Record sales of Apple. #WhatCrisis?

Thu, 01/26/2012 - 13:58 | 2100191 fuu
fuu's picture

well played

Thu, 01/26/2012 - 12:11 | 2099745 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

that last chart sure looks like a bubble to me, almost perfect.

Thu, 01/26/2012 - 12:51 | 2099892 The Count
The Count's picture

Let me quote DJ Financial News:

Chart of the Day: Shipping rates fall off a cliff

"The index – often used as a proxy for the health of the global economy as it reflects the prices charged for shipping commodities such as metals, coal or grain around the world – has fallen by 61% since October."

Dudes and dudettes, time to batten the hatches. This world's a-fucked good.

Thu, 01/26/2012 - 14:24 | 2100296 walküre
walküre's picture

BDIY still plummeting despite FED's assurance to the world that everything will stay as is. They even confirmed Obama's 2nd term. For those paying attention it should be clear just what happened yesterday.

Lower shipping rates for dry goods can also be a boon for the consumer economy. Lower rates can translate into lower prices and therefore a quasi stimulus to consumerism. However, lower rates are a reflection of a) increased capacity and b) much less aggregate demand.

All that CBs are doing with their policies is creating inflation, currency debasement and some panic buying of tangible assets.

Was saying yesterday that if BDIY was catching a bid to the upside due to FEDs announcement to offer ZIRP4EVA and mention some form of bond purchases (more QE) between the lines, I'd go back into equities. Failing the BDIY turnaround, I'm staying in cash plus tangibles. No equities, no bonds.

Disclaimer: Long cash, gold, silver, cattle, hay. Will accept gold, silver and fine art for beef sales.

 

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