Baltic Dry Index Rally?

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.

click to enlarge

Comments

[Chris B:]

Ah, games with percentages. A 90% loss (e.g. 100>10) requires a 900% gain to get back even (e.g. 10>100). Point taken about BDI volatility though.

A more interesting article might have mentioned how this could shake out the short sellers in BDI contracts.

2008 Dec 15 03:18 PM

[Urbane Gori...:]

The authors make a valid point as does Chris B... These types of headlines are just hype and possible hope.... Reminds me of TIm Plaeme's monthly articles on how the housing market in Sacramento is bottoming... I'm guessing he must either be a realtor, or own a bit of property in that area.. i can agree with Jim Cramer on one comment he has made lately "Hope is not part of the equation".

jegan ;-)

2008 Dec 16 04:10 PM