The Baltic Dry Index is an index covering dry bulk shipping rates, and made up of an average of other indices linked to international shipbroking companies. It provides “an assessment of the price of moving the major raw materials by sea.

Unlike stock and bond markets, people don’t book freighters unless they have cargo to move, which makes the index “totally devoid of speculative content,” says Howard Simons, an economist and columnist at TheStreet.com.

The index directly measures for shipping capacity and supply of dry bulk carriers. But demand for shipping varies with the amount of traded cargo, while supply of ships is pretty much constant. So the index indirectly measures global commodities supply and demand, such as cement, coal, iron ore, and grain. And since these raw commodities are used for production of finished goods, the index is also a good indicator of future economic activity.

Given all that… what would a drop like *this* tell about the chances of a massive, global recession?

Baltic Dry Index

Baltic Dry Index

Yet some analysts say this is just a correction:

“We’ve had this many times before over the last few years. We’ve had corrections and people have then thought it’s over. When I look at steel, prices have hit all-time highs. There’s an iron ore shortage in China, the coal market is in chronic short supply and coal prices hit new all time highs this week…it’s the reverse.”

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