The Baltic Dry Index (BDI) tracks worldwide international shipping prices of various dry bulk cargoes. The index provides "an assessment of the price of moving the major raw materials by sea.
Because it provides an assessment of the price of moving the major raw materials by sea, this index provides both a window into the shipping market and an accurate barometer of the volume of global trade devoid of political and other agenda concerns.
This index has often in the past acted as a leading indicator of what would happen later on the stock markets.
Let's look at the above chart that compares the price movements of the BDI and the S&P500: the BDI reached its bottom early December 2008 while the S&P500 reached the bottom 3 months later, in early March 2009.
If the BDI falls under 3000, this gives us a warning signal about what could happen to the S&P500.
Bonjour Pierre,
ReplyDeleteFor the week, it was lower by 941 points or 17.5%, a significant decline. However, we note that this is August and a slow period in the shipping industry. If the index continues to decline in September this would be a concern as it may be indicating that China’s raw material restocking has been completed as previously reported.
Stay the course....
Gardons la route.
-Roger