Friday, February 13, 2009

Important Sign of Recovering Economy

The Baltic Capesize Index measure of shipping costs has risen 337% from its early December low, and in percentage terms (i.e., using a log scale for the y-axis) has recovered about half of its losses.

Meanwhile, the more inclusive Baltic Dry Index is up 200% from its lows.

Obviously, someone is bidding up to ship goods, a very positive sign for the economy.

A note to my economist friends who are expecting the end of the world: The recovery I continue to discuss will eventually trigger positive numbers in GDP, employment figures and the like. This does not mean all is well with the economy. My belief is that the recovery is fueled by Fed money printing that will bring extraordinary inflation. Further, the heavy hand of government regulation, will add a chilling effect on business across the board. Long-term the economy s going to be wrecked, short-term the geezer has the strength for one more run up the hill.


  1. Couldn't this be an early sign of the inflation that will be triggered by all the interest rate reductions and QE that has been going on?

    I mean, Peter Schiff is going to be well browned off if recovery does come and he has to go around all those tv studios again explaining why his armageddon has to be postponed for the second year in a row ....

  2. Robert... since the low was a plunge of 96%, I'm not too impressed with a bounce of 337%. I'm a total rookie at looking at these numbers, but even with a 300-some percent rise, they still seem way below the norm.

  3. I'm just looking at the trend, not an absolute number.

    BTW, On a slightly different note. If you just bought a ship, or locked in rates before the climb, you would be very impressed with a 337% climb.

    It's the same with a stock. Say you buy a stock at a dollar that was once trading at $100. If it climbs to $4.00 (from $1.00) it may not seem much to the person that bought at $100, but the person who bought at a $1.00 now has a triple in the stock

  4. Apparently currency traders watch the shipping index too: