The Baltic Dry Index reflects the daily charter rate that cargo ships charge for transporting essential goods like iron, coal and grain.
I’ve put the Baltic Dry Index on the watchlist before. As noted previously, a drop in the Baltic Dry Index can be a prelude to a market crash (around 8 months later) according to Brandon Smith at alt-market.com.
The Baltic Dry Index (BDI) went down in 2008, just before the market crashed, and it went down again dramatically January 2012. So, according to Brandon, we should’ve had another crash around September 2012. Obviously that didn’t pan out exactly as Brandon expected, but we haven’t had a recovery either.
Two years later, it’s now January 2014, and the Baltic Dry Index is crashing again. It’s off to the worst start of the year in over 30 years. It’s down 18% in the last 2 days alone, which is the biggest drop in 6 years. The BDI is back to four-month lows, and the shipping index has collapsed over 40% in the last 2 weeks.