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Dec 2 / Jonathan

Scare Me (Baltic Dry Index edition)

Odd, isn’t it, how all these arcane terms are popping up in the major news outlets these days. I suppose that things like “credit default swaps” and “Baltic Dry Index” were out there around the periphery of my attention all this time, but suddenly they’re front and center and significant (well, maybe).

The Baltic Dry Index is a measure of international shipping costs. The name comes from its connection with the Baltic Exchange in London. Coincidentally, I’ve been listening to Alan Furst’s 2004 novel Dark Voyage, and there was a brief scene at the Baltic Exchange. So the next time the BDI appeared in the news, I took a closer look.

The scary part is a) the BDI has totally and dramatically collapsed, and is still going down, and b) it’s supposed to be an economic leading indicator. Here’s a graph from Investment Tools. Note the logarithmic scale; the red line is a 20-day average, the green is a 200-day average.

BDI

The BDI has a lot to do with the cost of tea (and everything else) from China, if not in China. And see also the end of the Wikipedia article for the implications for shipbuilders and shipping companies (hint: they’re going under).

Don’t worry, be happy.

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