The Baltic Dry Heads Lower

The Baltic Dry Index, which measures changes in the cost to transport materials, has really diverged from equity markets recently.  Below is a chart of the S&P 500 and the Baltic Dry Index over the last year.  In late 2009 when equity markets were making new highs, the Baltic Dry was also making new highs.  But at the end of November, the Baltic Dry Index topped out and hasn't gotten close to that peak since.  The Baltic Dry began to make a comeback at the start of the current run-up in stocks that began in mid-February, but a couple of weeks ago it completely stalled out and has since been heading lower even as the S&P has charged to new 52-week highs.  Even the Chinese stock market has been moving higher in recent weeks as the Baltic Dry has moved lower.  What gives?

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Comments

[william]

Could it be that the massive new, larger, faster capacity that was ordered pre-October 2008 has come onto the market and disturbed the demand/supply balance.
The weakness of demand in developed countries in the West also means that average transport distances have decreased.

[asdasd]

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