The Baltic Dry Index is a strange animal.
Some analists think that it is a measure for international trade flows.
The Baltic Dry Index, or BDI, is an index that tracks a blending of rates to ship dry goods - basic raw materials like iron, coal and grains - on three different-sized boats on the four main shipping routes.
Conventional wisdom - or perhaps just tradition - has analysts looking at the BDI as a leading indicator of how commodities and the global economy will perform. The old adage is that no one hires a ship unless they have something to transport, and if people are transporting things, that means they're buying and selling.
However, the correlation between commodities and/or stock indices seems to be weak. Even when you compare the BDI to the shipping companies themselves the relation is minor. Look to the Claymore/Delta Global Shipping Index ETF (ticker: SEA).
Some analists think that it is a measure for international trade flows.
The Baltic Dry Index, or BDI, is an index that tracks a blending of rates to ship dry goods - basic raw materials like iron, coal and grains - on three different-sized boats on the four main shipping routes.
Conventional wisdom - or perhaps just tradition - has analysts looking at the BDI as a leading indicator of how commodities and the global economy will perform. The old adage is that no one hires a ship unless they have something to transport, and if people are transporting things, that means they're buying and selling.
However, the correlation between commodities and/or stock indices seems to be weak. Even when you compare the BDI to the shipping companies themselves the relation is minor. Look to the Claymore/Delta Global Shipping Index ETF (ticker: SEA).
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