The Surprising Relevance of the Baltic Dry Index
newyorker.com
newyorker.com
(The discouraging thing to see there is that about half the containers coming in from Asia to the US go back empty.)
Depends on how you look at it. The US is only sending pieces of paper (or electrons that represent pieces of paper) and getting back containers full of goods.
http://www.igmchicago.org/igm-economic-experts-panel/poll-re...
Most foreign companies are forced to pair up with local Chinese companies. The transfer of IP is "included in the price of access to the market", to put it mildly. There are significant limitations when it comes to foreign participation in Chinese stock markets. Also, China now runs 4 of the world's 5 biggest banks.
http://money.cnn.com/2015/08/04/investing/worlds-biggest-ban...
It doesn't seem like Chinese labor plays that big of a role regardless, seeing as labor costs on a $800 device are around $2.
Apple and their shareholders certainly benefit from selling $800 devices at 70% profit margins, but I would not go so far as to say that consumers also get the benefit, seeing as they are paying 70% markups.
Well, the Foxconn (or whomever) assembly labor costs may be $2, but in some way, shape or form, all $800 is a labor cost to somebody, somewhere.
- it makes a lot more sense to ship by Air for product with such value per kg - Apple has been shipping products by Air since 1997(famously they booked the entire capacity for the holiday season) - Apple brags about how little inventory they keep all the time. Sea Freight is slow, very slow.
Yes, but not in the way you meant. Much of the outgoing US container traffic is recycling, mostly paper and steel. Container shipping to US to China is very cheap, since there are so many empties going back.
So the question: how do we reconcile these two things? Chinese capacity doesn't explain the drop, but BDI doesn't match the core "containers shipped" data you cite. Is Los Angeles' shipping somehow exceptional? Or is something else going on?
Fewer dry goods shipped == less money for people shipping them == unhappy working people in England == these vote Leave.
(Ridiculous oversimplification, but the article is suggesting this kind of prediction could be meaningful.)
You have a loud demagogue in the US arguing for building walls around the country. You have the UK voting for a divorce from the EU; and you have right-wing extremists in the EU applauding that decision (Marine Le Pen, etc). You have a totalitarian figure like Putin dominating the East for a long time. And fundamental indicators like the BDI seem to show a decrease in global exchange.
If not the whole world, then at least the West broadly speaking (North America, EU and Russia) is like that person who is gradually slipping into a nasty depression without noticing it, slowly becoming introverted and fearful.
A sign of health in this situation would not be further isolation and saber rattling, but a turn outwards, and increased cooperation, and a frank discussion about what's really going on. This holds true for persons as well as for countries.
A small, simple line graph of 10-20 years of this index would allow me to see in an instant how relevant it might be.
It struck me as a very odd editorial choice to leave this obvious graph out.
It has a very low correlation to any actual markets. People on trading floors have been pushing this baltic dry pitch for at least 10 years. It's very old news for anybody in markets and is more of an eye-roller than anything else. That the New Yorker has now latched on shows that they hope to get a bit of oh-wow out of it too. Snake oil.
Baltic Dry is fun to watch, but there is too much micro going on in it for it to have any macro significance that is not coincidental.