Why you should care about the Baltic Dry Index.

Commentary about business and finance.
Oct. 24 2003 5:11 PM

The Shipping News

The best economic indicator you've never heard of.

(Continued from Page 1)

As they say on CNBC, what does this mean for you? In this article from late last year, Howard Simons charted the index against the Dow Jones World Equity Stock Market Index and U.S. Treasury 10-year notes. His conclusion: "It's a very good leading indicator." Movements in the Baltic Index tend to precede movements in global stock markets. But the index also tends to presage higher interest rates. When more stuff is being shipped around the world, it needs to be financed. And that creates a greater demand for credit.

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So the shipping news—at least as measured by the BDI—is largely good. Even better, it may be a sign that China's trade deficit may be declining. The downside: China isn't sucking up raw materials in vast quantities from the United States. (We export grains and soybeans to China, but not coal or iron ore.)

Economists, investors, professionals, amateurs: Please send your suggestions for obscure economic indicators to moneybox@slate.com. If we use your idea, we'll acknowledge you in print and send you a Slate goody. 

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