Baltic Dry Index Indicates World Economy Improving
A recent look at the Baltic Dry Index (BDI), which measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea, indicates the world economy may be improving. Since 1985 the Baltic Dry Index has had a positive correlation of 0.5 to the S&P 500 (1 = perfect correlation, -1 = perfect inverse correlation).
However, the BDI has given conflicting signals in the past regarding economic improvement. Back in 2010 the BDI was on a 17 day losing streak, but the economy didn’t fall off a cliff [link].
Here is a recent Twitter feed from @MktOutperform of the BDI and the stock of Dry Ships (DRYS):