Baltic Dry
The Baltic Dry Index is an index covering bulk shipping rates. It is calculated by the Baltic Exchange and is the most commonly quoted proxy for the price of moving dry goods by sea. What is interesting is what has been happening to the BDI over the last few years.
Take another look at that. The BDI in 2007 hit roughly six times its 2002 level. The lag in the arb between the level of the BDI and the price of ships is of course reasonably long (about two years according to Slate), but still, this is an interesting trend. There has clearly been an awfully big spike in intercontinental trade and lots of new ships are coming on line. Now consider the most recent data from investmenttools.com:
The BDI is hard to manipulate as it is based on the prices needed to hire real ships to move real cargos. As cyclical indicators go, this one appears to be screaming 'bubble breaking, get short'.
Take another look at that. The BDI in 2007 hit roughly six times its 2002 level. The lag in the arb between the level of the BDI and the price of ships is of course reasonably long (about two years according to Slate), but still, this is an interesting trend. There has clearly been an awfully big spike in intercontinental trade and lots of new ships are coming on line. Now consider the most recent data from investmenttools.com:
The BDI is hard to manipulate as it is based on the prices needed to hire real ships to move real cargos. As cyclical indicators go, this one appears to be screaming 'bubble breaking, get short'.
Labels: BDI, Economic Theory, Markets
posted by David Murphy at 07:56
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