Baltic Dry Index Almost Back to Record Highs

Includes: IVV, SPY
by: Bespoke Investment Group

The Baltic Dry Index is up 82% since bottoming in late January, which might be a sign that the global economic environment is not faring as poorly as many think. The index was cut in half from its October peak to its January bottom, but it quickly reversed and is now approaching record highs again.

The Baltic Dry Index measures changes in the cost to transport raw materials by sea, and as noted on Investopedia, it

...can give investors insight into global supply and demand trends...

This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation.

Below we have plotted the Baltic Dry Index along with a chart of the S&P 500 since the last bull market began in October of 2002.

click to enlarge