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Wednesday, March 18, 2009

Baltic Dry, Global Trade: The Rally in Equities Isn't Real

The Baltic Dry Index (BDI) has been losing steam during this rally in equities. A sustainable trend changing rally in equities would be accompanied by an increase in BDI.

Also, in a real rally, a stock like Dry Ships (DRYS) would participate... or even lead. If the economic situation really was improving, global trade would be improving and this would be reflected in a name like DRYS.

Related Posts:
China, Commodities, Baltic Dry: Pop, then Drop


Charts and Coffee said...

Like your thinking here.

Josh said...

So its now SPX up, Gold explodes, US$ DOWN. All in the space of half an hour !
Are you sure about deflation ?
Zimbabwe Stock Exchange goes up daily in leaps and bounds. It isn't real either.

none said...

as expected, it could be that the b phase for gold is already over...

Fed Plans to Buy Up Long-Term U.S. Government Debt

Anonymous said...

unfortunately, unless you are well educated on the market, finance and economics, you have zero chance of understanding the dynamics of the markets.

Every blogger I read, e.g., like proclaimed deflation for years, and inflationary pressures were a myth. You basically heard the same thing from CNBC...the biggest hype on anything related to this market.

There is no one that speaks the truth out there, because everyone has something to gain by deceiving. Even paid services marginalize actual market trends until they're obvious.

Tord Steiro said...

I do like your point that international trade should pick up as the global economy gets better, and since trade isn't picking up, the economy isn't getting better.

However, it appears that oil will be/is breaking up. Oil prices should also indicate the state of affairs in the global economy, and they appear to be rising now.

So which one is for real? The Baltic Dry or the Oil Price (yes, I know there are interventions in the oil market)?

Further, the NOK behaves like the petroleum-currency it is, bouncing up and down with the oil price, although Norway have perhaps the soundest economic fundamentals in the Western World.

The NOK have long been ready to rise fomr the artificial low it has had since oil broke down in July, and it appears that it is now time.

As oil is breaking up, the USD will most likely break down, hence the vastly undervalued NOK will break up quite a bit.

Back to the question: If the Baltic Dry is indicating a still slow economy, I suppose the rise in NOK will be little but a short spike. However, if the oil price is staying high, indicating that the Baltic Dry is missing improvements, there could be reason to believe that the NOK will rally for a while.

Or not? What does the Ninja think?

TraderMark said...

True That

Wrote about it here - China and the Baltic Dry Index - whats really going on

Anonymous said...

One day later, with big news from DRYS, this doesn't look so clever. DRYS, DSX, EGLE, GNK, GSL, NAT, NM, TK are components of an index I constructed with base 100 at Nov 21.
That index is up nearly 10% today and stands at 157.

Greenlander said...

This is a departure from what I thought even a week ago but I dont think this is a far fetched possibility.

I wanted a heavy capitulation type bottom around 600(like probably almost all technicians), but now I'm leaning towards a more complex bottoming process. There is something strangely consistent about the tape since the bottom. Volume has been extremely steady for an up move (was v steady for corresponding down move, no panic) and price has moved up in a relatively straight line. Ive been looking for references and the texture of this up move really looks like the bull market we had before the market topped in 2007.

Everyone is talking about shorts fueling this rally but for me what is striking is I haven't seen many spurts of institutional selling. This is the tightest multi-day up channel so far in this bear market as far as I remember.

I am quite sure the banking system is going to die as we know it (at least here in Southern California) but we might see a spring rally like last april/ may, but on steroids. In the end, I can't imagine how it won't end ugly but doesn't mean we can't have a sick rally.

Commodities are also setting up for a multi month move upward. I dunno about gold but at least Ag's and oil.
This would carry the market quite high if fins also took off.

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