Baltic Dry Freight Index Matches Record Low

from Zero Hedge:
Having fallen for 20 straight days, crushing the hopes and dreams of the mid-year bounce - and thoroughly breaking down from seasonally positive tendencies - The Baltic Dry Freight Index has collapsed to all-time (back to 1984) record lows.

Baltic Dry Index Revisits Record Low

With no ability to directly manipulate the Baltic Dry Index to 'pretend' everything is awesome, it remains among the best 'real' indicators of the state of the global economy... and it's in the toilet...

It's a Bad Hair Day in the Financial Markets. Time for a Wake-Up Call!

The news is almost universally bad today. After the market rallied powerfully to erase a 150-point Dow loss yesterday, today the news is bad, bad, bad.

Home sales are down 7 months in a row! Case/Shiller is tanking!

The Baltic Dry Index continues to tank!

Chicago PMI was down, surprising the market to the downside!

The U.S. is on the verge of sharp job losses, according to Art Cashin!
From Art Cashin UBS Financial Services:
Disappointing Jobs - While everyone seems to debating what the non-farm payroll numb will be Friday, a few are looking toward the annual revisions in the much debated Birth/Death model.
As you probably recall, it does not refer to the birth or death of humans. The badly named model refers to the birth and death of businesses. Each January the BLS revises the number, usually vaporizing thousands of jobs.
We were going to try and calculate the likely revision, but our sharp-eyed friend over at Bloomberg, Rich Yamarone, as usual, beat us to it. Here’s what he wrote in his Notepad column recently:

The Net Birth/Death (NBD) statistic adjustment – an adjustment the BLS uses to account for job creation or loss with respect to births and deaths of businesses – is always the weakest during January. Over the last five years the NBD for January has averaged -335k. [January 2011: -339k, January 2010: -427k, January2009: -356k, January 2008: -378k, January2007: -175k.]

The CBO says the real unemployment rate is 10%!
"Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 1¼ percentage points higher than the actual rate of 8.7 percent"- translation: CBO just admitted that the BLS numbers are bogus and real unemployment is 10%. 

The latest "treaty" out of Europe leave much to be desired, despite that Euro-zone countries are going to be required to give up most of their sovereignty.

Retail sales in Germany are slumping.

Europe data shows almost certain recession in the area with the largest GDP in the world.

Baltic Dry Index Plunges Again

from ZH:

When we noted last night that there was a Baltic fat finger index, we thought we were joking. Appears not. The BDIY has plunged by 4.5% overnight from 1,773 to 1,693, easily the biggest one day drop in a long time. And, more importantly, the index has just taken out the 2010 lows hit on July 15, when the BDIY last traded at 1,700. So in a normal world, one could argue, the fact that there no demand for shipping may actually indicate something. However, in this bizarro "5 year plan" politburo reality, this will likely result in futures once again surging as QE4.5 starts getting priced in.
Chart shows data as of most recent prior update.

Baltic Dry Index Dropping Again

from Zero Hedge:

Last week, we pointed out when the BDIY dipped below 2000 for the first time since August. In the next three days, the index slide has accelerated and after dropping 3% just overnight, is back to 1830, just 130 points away from the 2010 lows printed in July. And while the index topped in early September following a brief and uninspired climb, it has since been a one way downward pointing slope. Whether the BDIY is a leading indicator to anything is debatable: some believe it is a completely irrelevant indicator. Others disagree. A very strong case for the former camp was made last week by Nordea which demonstrated, in its chart of the week, the average speed of its vessel fleet. One thing is certain: for whatever reason, demand for trans-Pacific cargo shipments is once again plunging.

Baltic Dry Index Continues Plunge to 33 Days

The CSX earnings surge can be easily explained now that the rail company has cornered the China-US transportation corridor (what's that, it's an ocean? that's ok - the president will enact a law changing that). Because goods transit sure isn't using the dry bulk shipping sector, where the Baltic Dry has plumbed to a fresh 14 month low, continuing its longest drop in 9 years, down for a 33rd sequential day to 1,790 from 1,840. Don't look for any record numbers out of the China Customs agency or the US trade deficit in the next month.

Baltic Dry Index Continues to Fall

This index is a great leading indicator because it measures global trade. This is not a good sign.This is the longest ever decline in the index.

TOKYO (MarketWatch) -- You'd never know that a key marine freight index was plunging by looking at Asian shipping shares' year-to-date performances, and some analysts remain upbeat on freight rates in the long term.

Most Asian shipping shares extended their gains Thursday, as broader markets rallied in the wake of a strong advance on Wall Street.
But the Baltic Dry Index, which tracks sea freight rates to ship dry commodities, fell for the 30th straight day through Wednesday to its lowest level since May 2009. According to the Baltic Exchange, which compiles the index, the BDI fell 5.1% to 2,018 points --down to less than half of its May 26 peak of 4,209.
"It is the longest decline in six years," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "The main driver seems to be concerns about the cooling of China's steel sector. Steel is the biggest user of iron ore. Iron ore and coking coal account for more than a third of the Baltic dry freight."
Economists still view the index as a barometer of global productivity trends, but "it appears there are some growing concerns about its usefulness today versus its usefulness, say, two years ago. And it's all down to shipping supply," Izabella Kaminska at FT Alphaville wrote on Wednesday.

Sign of the Global Economy

Here, on a sleepy stretch of shoreline at the far end of Asia, is surely the biggest and most secretive gathering of ships in maritime history. Their numbers are equivalent to the entire British and American navies combined; their tonnage is far greater. Container ships, bulk carriers, oil tankers - all should be steaming fully laden between China, Britain, Europe and the US, stocking camera shops, PC Worlds and Argos depots ahead of the retail pandemonium of 2009. But their water has been stolen.
They are a powerful and tangible representation of the hurricanes that have been wrought by the global economic crisis; an iron curtain drawn along the coastline of the southern edge of Malaysia's rural Johor state, 50 miles east of Singapore harbour.
Article about shipping business being dead

Baltic Dry Index Down 11 Weeks In a Row!

From Ambrose-Pritchard at the Daily Telegraph:

Two facts that should give pause for thought.
1) Japanese data released on Thursday showed that exports fell yet again in July. They are down 39.5pc to the US, and 26.5pc to China.
Japan is the world’s second biggest economy. It lives on exports. It is also a key part of the supply chain for the Chinese economy. How can this hard data be reconciled with the extreme V-shaped recovery already priced in by the markets?
By the way, Toyota is suspending a key production line at its Takaoka plant in central Japan. It is cutting global capacity by 1m vehicles.
2) The Baltic Dry Index measuring freight rates for bulk goods and commodities has been falling almost continuously for eleven weeks, dropping from 4,290 to 2,778 on Thursday.
Is this just a glut of ships or is this telling us what the Shanghai market is also telling us, that credit tightening by the Chinese government is pulling the rug from underneath the latest commodity bubble?
There is something wrong with the entire recovery tale, which ignores the fact that excess plant is still at the highest level since the Great Depression (capacity use is 70pc in Europe, 68pc in the US, 65pc in Japan, and as low as 50pc in some countries, according to the World Bank’s Justin Lin). Companies will have to cut jobs and investment.
Soaring “confidence” indicators have decoupled from reality. The world economy is still prostrate. GDP has shrunk 4pc, 6pc, 8pc, even 12pc or more in a large group of countries. There it more or less sits, like a deflated soufflé.
An end to technical recession in France, Germany, and Japan because Q2 ( and undoubtedly Q3 to come) ekes out a rise from a collapsed base does not mean anything – except that zero interest rates worldwide, and a massive fiscal stimulus that is pushing public debts towards 100pc across the OECD states (and cannot easily be repeated once the first sugar rush subsides), has mercifully prevented the Great Contraction from turning into an immediate catastrophe.
As the Bank of England’s Governor Mervyn King puts it: “It’s the level, stupid”. The level of economic activity is years away from full recovery.
The Bundesbank’s Axel Weber says it will take until 2013 for Germany to get back to where it was. He also warns, by the way, that there will be a second wave of the credit crisis as Germany’s home-grown troubles come to the fore. Round one was imported havoc from the US: round two will be rising defaults at home and a credit squeeze as ratings downgrades force banks to set aside fresh capital. (I enclose the Weber link for German readers http://www.sueddeutsche.de/finanzen/916/484353/text/)
I have no idea when stock markets and commodities – especially base metals – will reflect the hard facts on the ground (ie, an end to the Chinese construction bubble). Timing is not my forte. Nor is the market.
But I am absolutely convinced that those who think we can return to the status quo ante of the credit bubble as if nothing has happened are delusional. As almost every central banker in Jackson Hole reminded us over the weekend, it is going to be a very long hard slog.