DEFINITION OF ‘BALTIC DRY INDEX – BDI’

A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed).

The Baltic Dry Index is a composite of three sub-indexes that measure different sizes of dry bulk carriers (merchant ships) – Capesize, Supramax and Panamax. Multiple geographic routes are evaluated for each index to give depth to the index’s composite measurement.

It is also known as the “Dry Bulk Index”.

INVESTOPEDIA EXPLAINS ‘BALTIC DRY INDEX – BDI’

Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation.

Because the supply of large carriers tends to remain very tight, with long lead times and high production costs, the index can experience high levels of volatility if global demand increases or drops off suddenly. The Baltic Exchange also operates as a maker of markets in freight derivatives, a type of forward contract known as FFAs (forward freight agreements) that are traded over-the-counter.

So why watchThe Baltic Dry Index  ?

Investors are always looking for practical economic indicators they can use to help them make informed investing decisions. Peter Lynch, the famous manager of the Fidelity Magellan Fund, talked about looking for practical indicators in the world around you—like looking at what products your friends are buying or what stores always seem to be crowded. The Baltic Dry Index (BDI) is a practical economic indicator on a global scale.

Why Investors Watch the Baltic Dry Index

The Baltic Dry Index is a leading indicator that provides a clear view into the global demand for commodities and raw materials. The fact that the Baltic Dry Index focuses on raw materials is important because demand for raw materials provides a glimpse into the future. Producers buy raw materials when they want to start building more finished goods and infrastructure—like automobiles, heavy machinery, roads, buildings and so on. Producers stop buying raw materials when they have excess inventory and when they stop infrastructure projects.

Typically, demand for commodities and raw goods increases when global economies are growing. For investors, knowing when the global economy is growing is helpful because that means stock prices, commodity prices and the value of commodity-based currencies should be increasing. Conversely, demand for commodities and raw goods decreases when global economies are stalling or contracting. For investors, knowing when the global economy is contracting is helpful because that means stock prices, commodity prices and the value of commodity-based currencies should be decreasing.

The Baltic Dry Index is also a compelling indicator because it is a simple, real-time indicator that is difficult to manipulate. Some economic indicators—like unemployment rates, inflation indexes and oil prices—can be difficult to interpret because they can be manipulated or influenced by governments, speculators and other key players. The Baltic Dry Index, on the other hand, is difficult to manipulate because it is driven by clear forces of supply and demand.

The supply that affects the Baltic Dry Index is the supply of ships available to move materials around the globe. It is difficult to manipulate or distort this supply because it takes years to build a new ship that could be put into service to increase supply, and it would cost far too much to leave ships empty in an attempt to decrease supply. The demand that affects the Baltic Dry Index is the demand of commodity buyers who need the raw goods for production. It is difficult to manipulate or distort demand because it is calculated solely by those who have placed orders to have raw goods shipped. Nobody is going to pay to book a Capemax cargo ship who isn’t actually going to use it.

Interpreting the Baltic Dry Index

The Baltic Dry Index typically increases in value as demand for commodities and raw goods increases and decreases in value as demand for commodities and raw goods decreases.

Here’s what it typically means when the Baltic Dry Index turns around and starts moving UP:

– Global economies are starting to, or continuing to, grow

– Companies are starting to, or continuing to, grow

– Stock prices should start to, or continue to, increase in value

– Commodity prices should start to, or continue to, increase in value

– The value of commodity currencies—like the Canadian dollar (CAD), the Australian dollar (AUD) and the New Zealand dollar (NZD)—should start to, or continue to, increase in value

Here’s what it typically means when the Baltic Dry Index turns around and starts moving DOWN:

– Global economies are starting to, or continuing to, contract

– Companies are starting to, or continuing to, contract

– Stock prices should start to, or continue to, decrease in value

– Commodity prices should start to, or continue to, decrease in value

– The value of commodity currencies—like the Canadian dollar (CAD), the Australian dollar (AUD) and the New Zealand dollar (NZD)—should start to, or continue to, decrease in value

You can follow it here : http://www.bloomberg.com/quote/BDIY:IND/chart

There’s a cold wind blowing through Södermalm in Stockholm.

The entry phone that has apparently never worked is still playing up and I eventually dash in the next time it opens, climb a flight of stairs and knock on the door.

In the run down, four room apartment on Åsögatan that usually resembles a youth club, there are today three illustrators working quietly at their desks.

“It was really warm when we moved in, and they probably hadn’t aired the place that much,” says Mikael S Eriksson, who runs Rithuset, a company located at the same address that one of Sweden’s most talked about Internet companies took its very first steps towards an unlikely gaming empire in the 21st century.

There is a small piece of the chunky Minecraft imagery wallpaper that’s been salvaged and framed, along with a coffee cup with the word ‘Mojang’ on it.

“At first, tourists would show up here wanting to see the place. For example, an American family knocked on the door one day,” continues Mikael S Eriksson. “There’s something almost religious about Minecraft’s and Mojang’s successes. Hope it’s contagious.”

“But it must have been crowded for them towards the end, more than 20 people and just one bathroom,” adds colleague Stefan Hörberg, and points. “He sat there.”

He.

Markus Persson.

When Microsoft bought Mojang in September for almost SEK 18 billion, Minecraft didn’t just become the biggest Swedish gaming success in history, the legend of the man in the hat, the unknown hobby programmer who became a superstar and multimillionaire, entered a new chapter.

But tell me one story that is a success from start to finish.

“All the kids know what Minecraft is and that Markus spent his first few years of school here.”

http://www.expressen.se/nyheter/the-story-of-markus-notch-persson/

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Make no mistake the world is currently engaged in a financial war and the ruble collapse is just one battle. The 2008 Great Financial Crisis ushered in a new currency war that has morphed into a financial market war, with oil as the weapon of choice.

I am not trying to be a fear monger, I am simply pointing out what is occurring in the financial markets. In the beginning, a financial war seems like a no-brainer, i.e., use financial might to damage your enemy’s economy. The flaw in this logic is it assumes no impact on the economy of the attacker. In the age of open economies investors are correct to be concerned about the collateral damage.

he latest battle in this financial war is the engineered drop in oil and subsequent collapse of the Russian ruble. Now that this battle has been waged investors need to know what/where the next battlefield may be.

order to answer this question we need to understand what has transpired over the last few days. Many have been shocked by the lack of intervention by the Central Bank of Russia (CBR) in the days leading up to the currency collapse. Implicitly or explicitly, it appears Russian President Vladimir Putin has allowed a raid on the central bank currency reserves to benefit the oligarchs and state owned corporations. These corporations have issued debt in rubles and either immediately converted into US dollars or have used the debt as collateral at the CBR. The CBR had a choice to defend the ruble and give its foreign currency reserves to speculators or give those reserves to the state owned corporations. The lack of serious currency intervention suggests the CBR has chosen the latter.

The economic impact of this decision is likely to be felt by Russian citizens as they encounter double-digit inflation. If Putin does not handle the internal situation correctly then Russia could face social unrest which may threaten Putin’s leadership. Therefore, Putin’s next move will define the next battle in the global financial war. The leading battlefield candidates are the wheat market, U.S. Treasurys and Gold.

The currency collapse could accelerate Russian aggression in Ukraine. In my view, the purpose of the invasion has always been to control the port cities along the Black Sea. Since roughly 30 percent of the global wheat supply moves through these ports, control gives Putin a formidable economic weapon. Since further aggression risks more economic sanctions it is unclear if this is the most probable move.

Read  more here  : http://www.cnbc.com/id/102285208

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OPEC will stand by its decision not to cut crude output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the United Arab Emirates’ energy minister said.

OPEC won’t immediately change its Nov. 27 decision to keep the group’s collective output target unchanged at 30 million barrels a day, Suhail Al-Mazrouei said. Venezuelasupports an OPEC meeting given the price slide, though the country hasn’t officially requested one, an official at Venezuela’s foreign ministry said Dec. 12. The group is due to meet again on June 5.

“We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” He said current conditions don’t justify an extraordinary OPEC meeting. “We need to wait for at least a quarter” to consider an urgent session, he said.

OPEC’s 12 members pumped 30.56 million barrels a day in November, exceeding their collective target for a sixth straight month, according to data compiled by Bloomberg. Saudi Arabia, Iraq and Kuwait this month deepened discounts on shipments to Asia, feeding speculation that they’re fighting for market share amid a glut fed by surging U.S. shale production. The Organization of Petroleum Exporting Countries supplies about 40 percent of the world’s oil.

Prices Tumble

Brent crude, a pricing benchmark for more than half of the world’s oil, slumped 2.9 percent to $61.85 a barrel inLondon on Dec. 12, for the lowest close since July 2009. Brent has tumbled 20 percent since Nov. 26, the day before OPEC decided to maintain production. U.S. West Texas Intermediate crude dropped 3.6 percent to $57.81 in New York, the least since May 2009.

The U.A.E. hasn’t been informed of any plan for an emergency meeting, Al-Mazrouei said. OPEC Secretary-General Abdalla El-Badri said, “we don’t know,” when asked at the same conference about the possibility of such a meeting.

http://www.bloomberg.com/news/2014-12-14/u-a-e-says-opec-won-t-change-output-even-if-price-drops-to-40.html

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Spotify says it has 12.5 million paying subscribers. If you do some very simple math, you can guesstimate that the company is going to end up doing more than a billion dollars in revenue this year.

Another reason you can feel comfortable guessing that: A year ago, when the music streaming service was smaller, it had already hit the $1 billion mark.*

That number comes courtesy of a new filing Spotify made today in Luxembourg, which spells out its 2013 financials in considerable detail. That doesn’t tell us how the company did this year, of course. But it’s very helpful to get a sense of direction.

Big picture: As of last year, Spotify was growing very fast, but wasn’t making any money. The good news is that the company’s top line was growing faster than its losses, which is one of the reasons it could raise money at a $4 billion valuation a year ago. And it suggests that CEO Daniel Ek’s argument — that the company could indeed be profitable if it didn’t plow more money into growth — might hold up.

Here’s a snapshot of the company’s P&L from last year. Note that revenues were up more than 70 percent, while its operating loss grew by less than 20 percent.

http://recode.net/2014/11/25/spotify-is-a-booming-billion-dollar-business/

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France may look like the sick of man of Europe, but Germany’s woes run deeper, rooted in mercantilist dogma

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China’s outstanding foreign debt hit 5.58 trillion yuan (907.24 billion US dollars) by the end of June

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