Baltic Dry Index Caves In

We follow this one each week in NFTRH’s Global Market Internals segment.

When I was noting the curious positive price divergence (most recent spike) by this shipping cost index to global stocks and commodities in Q4 an astute subscriber advised that this was likely due to shippers front-loading their shipments before trade tariffs would kick in.

So we expected January to be bad as the air has come out of that balloon.

baltic dry index

This is an index of costs, not of stocks. So the chart should be looked at differently. No TA, just a literal view of prices for shipping freight. Those prices however, have imploded and the trend up (higher highs, higher lows) since the ‘inflation trade’ began in Q1 2016 is no more.

Meanwhile, commodities and global stocks bounce as anticipated. But if that is real, you would think BDI would soon re-firm the slack in its rope after fixing the tariff front-loading issue. Otherwise it’s a negative divergence.

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