This morning (Feb 12) the Baltic Dry Index hit an all time low at 553. The previous low of 554 was set on Aug 6 1985. What is the BDI you say?
The BDI is a very leading indicator signaling future guesses on the amount of shipping of dry freight that are to be conducted in the future. It is very volatile as we can see from these charts with a high of nearly 12000 in the spring of 2008 and dropping to about 700 a couple of months before the crash of 2008.
The new low of 553 signals major trouble ahead.
A hint is in the Chinese trade balance for Jan 2015.
China Posts Highest Trade Surplus on Record in January.
China reported a USD 60 billion trade surplus in January of 2015 compared with a USD 31.86 billion surplus a year earlier as imports fell at a faster pace than exports.
In January, imports dropped by 19.9 percent toCNY 860 billion year-on-year (approximately USD 140 billion) with imports from US down 9.3 percentExports unexpectedly declined by 3.3 percent to CNY 1.23 trillion (approximately USD 200 billion), but exports to the US rose 4.9 percent.
Since the Lunar New Year typically falls in January or February, the country’s trade figure in early year often considered as volatile, due to companies rushing to fill orders ahead of holidays. What is doubly troubling is that this year the Chinese new year fell in February. Last year it fell in January, so the declines are doubly troubling.
There is trouble ahead.
Update 1: Friday 2/13 it hit 530, a new record low
Update 2: Tuesday 2/17 it hit 522 a new all-time low.
Update 3: Wednesday 2/18 hit 516, a new all time low.
Update 4: Thursday 2/19 hit 509, a fourth new all time low in a row.