Via Jim Stack, comes these terrific series of charts comparing the 2006 markets with what I have previously referred to as the better analogy than 1994.
What I find so astonishing about these divergences is the Transports,
depsite the 20% drop in oil and 30% drop in gasoline, cannot keep up
with the Dow. Intriguing.
A picture is worth a thousand words, so I will let these graphs do the talking:
The 1972-73 top:
The 2006 markets:
Another edition of our new series: Blog Spotlight.
We put together a short list of excellent but somewhat overlooked
blog that deserves a greater audience. Expect to see a post from a
different featured blogger here every Tuesday and Thursday evening,
Next up in our Blogger Spotlight: RJH Adams (known as Rawdon) of Capital Chronicle. Rawdon was raised in a tiny emerging economy, and his professional life began as a dogsbody at the UK’s economics and finance ministry, HM Treasury. He subsequently moved to the finance functions of multinationals Xerox (UK) and General Electric (France) learning from the inside what making quarterly numbers really involves. In 2000 he left and co-founded an investment vehicle. He lives in the French Alps splitting most of his time between raising three small occasionally charming children and reading about economic development and investment."
Today’s focus commentary looks at:
How good is the Baltic Dry Index as a proxy for global economic activity?
Conclusion: Still worth looking at – but with a proviso since 2006.
China moves in 2006 to being a consistent net exporter of steel its
influence over an important driver of the Baltic Dry Index (BDI) – iron
ore for steel production – grows. But China’s massive growth in steel
output has come in large part though government intervention. This, to
some degree, is distorting the underlying freight rate picture.
what degree is key. The level and volatility of the BDI is influenced
not only by total commodity demand but also by fuel costs, seasonality,
fleet numbers, route bottlenecks and sentiment. These additional
factors should temper conclusions about the relevance of China’s steel
activities on the level of the BDI.
BDI has in the past been helpful to assessing global economic activity.
It is, after all, a reflection of real prices paid to ship production
inputs across the globe. Since March this year the index has been on a
tear, rising 70%, or 1,750 points.
Category: Blog Spotlight