Baltic Freight Index

Many rock star hedge fund mgrs are pointing to the plunge inthe Baltic Freight index as a sign of slowing economic growth. That is only partly true. The index is not a measure of tonnage moved, it is a index of prices paid to move that tonnage. There is going to be an oversupply of ships on the high seas as the total tonnage of ships available has outgrown the the total tonnage of goods to be moved. Stay tuned as shipping rates will continue to plunge as the number of new builds oversupply the mkt. The classic value trap is being built in the shipping stocks.

There is no doubt he rapid growth rates in CHINDIA are moderating, but moving from 11 % to 8% is partly due to unsustainable growth rates and partly due to the law of large numbers. Growing from 100 to 110 is 10% growth, but gowing from 110 to 120 is 9%. Growing from 120 to 130 is 8.3%. Of course the growth seekers view this as negative, but the value managers see this as a positive.