The Baltic Dry Index measures the shipping cost of a group of commodities (a lot of which go to China). The index is often used as a barometer for global trade as it shows the demand for raw materials. Since the commodities themselves are usually inputs for the production of finished goods, the dry index is often viewed as a leading indicator for the global economy. It’s interesting to note that the baltic dry index is off 35% since it peaked at the beginning of June. Within the last few weeks you can see a sharp divergence from the Baltic Dry Index and the S&P 500. Last week’s drop of 17% was the worst performance for the Baltic Dry Index since October of 2008.
Baltic Down, S&P UP?
