The Baltic Dry Index (the spot index for dry bulk shipping) became famous during the commodities super-spike pre-financial crisis. It was suddenly bandied about by economists and strategists as a leading indicator for the economy ‘because it was related to commodities demand’.<\/p>\n
We have spoken at length in the past how this was and is complete hogwash, how just by the BDI’s very nature of construction it couldn’t be a reliable indicator for the economy<\/a>. We also explained why it was ridiculous for Raymond James to think it could even be an indicator for oil<\/a>.<\/p>\n At this stage we’ve basically learned to just bite our tongue every time we see it mentioned as a reliable indicator for the world. You really have to know what’s going on behind it.<\/p>\n Well, you don’t need to take it from us anymore. Here —<\/strong> An economist put in his place, by a shipping markets specialist from M2M Management<\/a>, for mentioning that he used the BDI as an indicator. <\/strong>Hopefully this video helps kill off the BDI-as-indicator meme because it’s been really hard to do.<\/p>\n Starting at 4:20: <\/span><\/p>\n Economist: “As an economist [sic] we often looked at the Baltic Freight to predict world trade, if you see it going up it means more trade with China and so on…”<\/p>\n Tim Coffin from M2M: “I doubt that the Baltic Dry Index has ever been a good leading indicator because there are too many inputs into the BDI itself…”<\/p>\n See his full explanation in the video below.<\/p>\n (Tip via our friends at Transport Trackers<\/a>)<\/p>\n \n