If you are looking for insight into global supply and demand trends, the Baltic Dry Index is one of the purest leading indicators of economic activity.
It offers a real-time glimpse at global raw material and infrastructure demand, as well as the supply of ships available to move this type of cargo.
The low is troubling because this Index is often interpreted as a reliable indicator of demand. The Index moved higher from 2003 to 2008. Since then, we have seen a series of lower highs and lower lows.
The only positive I see is the divergence of the momentum indicator (at the bottom), which is higher – even though price is lower.
However, with stock markets around the world near all time highs … and demand for bulk commodity movements at all time lows, the paradoxical position is staggering.
For commodity followers, low prices are one thing but some of that can be attributed to a soaring $USD.
The Baltic Dry Index tells us how much demand there is for movement of the commodities. It is clearly indicating global weakness and the Central Banks around the world dropping their interest rates ahead of the analysts in almost every market suggests all is not well.