While the market is busy rallying on backward-looking news, few seem to have noticed that the Baltic Dry Index (BDI) appears to again be rolling over. The BDI measures shipping prices of various dry bulk cargoes and is a solid indicator of what is actually and currently happening in the global economy.
The index had benefited recently from a rebound in commodity purchases (particularly iron ore) by China. However, it is likely that Chinese fiscal stimulus may have led to a stockpiling of ore which will need to be worked down. The recent weakness in the BDI may be corroborating this view. This is one to watch.
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