Saturday, April 4, 2009

'baltic dry index & dead cat bounce'

a client just sent sent me a note. quoted below.

In case you did not see this indicator, I thought it might be of interest vis a vis the basis for the current bear rally.

Baltic Dry Index dropped 31% this month - interesting story comparing this latest bear market bounce in equities vs. the one in November. Apparently with that one, which ended in early January featured a rising Baltic Dry Index (considered the most impeccable indicator of economic strength). In the current stock mkt run up, the BDI is actually down 31%:

"Additionally, whereas CNBC would chirp every 5 minutes when the Baltic Dry was up, up and away beginning in January, very little attention has been brought to the fact that the BDIY has dropped over 31% over the past month."….

not that I'm willing to put much money on it, but my guess is the current pump has a little further to go. shipping prices may well be a leading indicator, but financial markets are not about prices paid for real goods and services. hard to judge the near-term really, but I'm keeping tabs the best I can in the newsletter.