Cheap Oil: Unhealthy?

Summary

Discussion of the potential effects on equity, bond, commodity, capital and asset markets regarding:

The affect of Low Oil, Shipping and Commodities Costs; Unhealthy "stimulus"?

TEU'S and the BDI (Baltic Dry Index); BDI and Trade Volume Growth.

BDI and ISM correlation; Sotheby's - Moller Maersk Indicator.

Contrary to monetary theory and Nobel laureate Milton Friedman, monetary flows have lags or latency that can be seasonal, short or long in duration and predictable. So to, do production cycles, shipping seasonality and the stockpiling of commodities resources. Speaking of which, squirrels are hoarders who bury their stash underground, to be dug up at a later date, or for a "rainy" day. Along those lines...

TEU's and the BDI

Definition TEU = Twenty-Foot Equivalent Unit which can be used to measure a ship's cargo carrying capacity. The dimensions of one TEU are equal to that of a standard 20′ shipping container. 20 feet long, 8 feet tall. Usually 9-11 pallets are able to fit in one TEU.

The Baltic Dry Index has existed in its current state since 1985, and it had its first big drop in mid-1986, just under a year before the Black Monday crash hit markets in 1987. In 1999 the Baltic Dry slumped to 12-year lows, very soon before the dot-com bubble burst. It slumped again to another massive low in 2001, around the same time the US economy fell into a recession that lasted until 2003. - Business Insider

Note above, the Baltic Dry Index hitting an all time low 291 which is 50% lower than one year ago. As we Nattered on Oct 20, 2015, in Not Enough Liquidity and TEU Many Empties? and in The Fallout Part 7 on Aug 23, 2014 and just the other day, the Baltic Dry Index, transports and shipping have taken a beating, and transports always lead the way. Aside from being a harbinger in '87, '99 and '01, the BDI was a precursor to the 2008 crisis.

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