THE DAILY CHART: Baltic Dry baffles bulls and bears

The Baltic Dry Index (BDI), a measure of international shipping prices for raw materials, has pulled out of its recent nose dive, which included a harrowing 35 consecutive falls. It wasn't long ago that commentators around the world were engaged in a heated debate about the implications of such a consistent decline, which also grabbed our attention (THE DAILY CHART: BDI's China bruising, July 1). But while the commentariat, both bulls and bears, had plenty to say when the BDI was falling, they've gone quiet with the index off its lows. Why is that?



It's probably because the rebound serves neither side's argument. The steepness of the BDI's fall in June saw the bulls pointing to an expansion of the global dry-bulk vessel fleet, while the bears blamed the decline in Chinese iron ore imports. Now that the index is off its lows, it's difficult for the bulls to use it as a sign of increasing demand for dry-bulk vessels and thus evidence of improving economic activity, because they've already conceded that the supply-side of the equation is just as important. Meanwhile, the bears' hands are also tied because pushing a 'just finished steeply declining' index as a sign of deteriorating economic activity doesn't have the same ring to it.