Baltic Dry Index: the real economy indicator?

By | 21 June 2015

baltic dry index

Surfing on Internet there are many articles regarding indices that would mirror the real economy. One of these is the Baltic Dry Index.

This index includes the changes in costs of shipping on the main world routes of dry raw materials (oil, LNG etc. are not considered). As you can see in the chart from 2011 it has a clear downtrend with a minimum reached in February 2015. The index indicates the state of the world economy because worldwide export route are mainly via vessels. Then you can conclude that the economy is in decline although there would be a component of euro-dollar in the last period to be taken into consideration that may influence the market. What about financial markets?

dow transportation

Looking at the American market we can see that Dow Transportation Index (represented in candles) from beginning of 2015 had the same trend of the Dow Industrial (represented by the orange line) until March 2015. From April until today they seem disconnected with a growing gap. So the Dow transportation is oversold (but RSI don’t show this) or the Dow industrial is overbought. We will see in the coming months whether this gap will disappear.

 

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Questo post è disponibile anche in: Italian