The Baltic Dry Index has been getting some attention recently after rallying more than 15% from its lows. One headline we came across even said that shipping companies were benefiting from the "revival" of the Baltic index. Revival? While the Baltic index is indeed up from its lows, it is still down 93.5% from its highs in May, and as the chart below illustrates, the recent gain is barely even visible to the naked eye. Global shipping rates will bottom at some point, and may have already done so, but to call the action of the last two weeks a revival seems a bit premature.
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So how do we invest in this index? Assuming we believe that the drop is caused by temporary hoarding of oil?
Posted by: Ted Murphy | December 16, 2008 at 10:43 PM
Are the letters of credit issueing again?
The Index is not a cause, it is an effect. Moreover, as this continues, pileup of goods is causing shippers to back fill the supply line causing massive dislocation and shut downs...collateral damage to the credit freeze.
What we really need is a world credit index based on credit availability and not a fictitious credit rate.
Posted by: DCM | December 30, 2008 at 12:58 AM