Baltic Dry Index now up 40% over the month. Also, 11-10-09 a bust, any more dates..?
The Baltic Dry Index has been soaring over the last month, from a low at the end of September (2100) to over 3500 presently. That is a pretty huge change, which is only starting to be reflecting in the stocks of Dry Bulk Shipping companies such as EGLE, PRGN, NMM, etc. EGLE, a personal holding, rose almost 20% over this last week, but could go much higher.
The Baltic Dry Index has been called "one of the purest leading indicators". It represents the current yearly contract rates for the dry bulk shipping vessels. Right now, it doesn't track 1:1 with the actual rates that shipping companies are locked into, as most shipping companies get rates that are below spot rates and also have been getting shipping contracts shorter than a year. Both of those facts, combined with an increasing BDI trend, are very positive for these companies. With shorter contracts than a year, many shipping companies will soon be able to lock in higher priced contracts and boost their margins. And, it suggests that the sector as a whole may have hit it's low point already. As a leading indicator, the BDI reflects increasing global activity in demand for bulk shipping - particularly reflecting resource usage. Dry Bulk is shipping of raw materials that can all be tossed into a huge bucket - think coal, corn, soy, rice, iron ore, aluminum. A rising BDI could be a signal that companies like AA, X will be having higher revenues soon.
Most industrialized nations reported positive GDP growth in the 3rd quarter, so this rise in the BDI tracks well with other indicators of increasing industrial activity. I expect this rise to continue through the 4th quarter, and begin to stall in the early spring as the recovery slows.
Also, Alstry's scary prediction of 11-10-09 again proved to be empty.
My prediction: Alstry makes more vacuous date predictions for a future collapse, and doesn't admit that he was wrong when those also fail.
I hope you all aren't investing based on "Failstrynomics". Hmm.. "Failstry"... I think that's not a bad term. In honor of the last two failed predictions, I'm using "Failstry" in my blogs during the next month.