The Fed and markets disconnect

Volatile market: Traders working on the floor of the New York Stock Exchange in New York. The Dow is down with defensive stocks outperforming cyclical stocks, which usually fare worse in an economic downturn. – AFP

MY lunch buddies at the Royal Lake Club’s Batek Bar know what Canadian Dry is. They have no clue what Baltic Dry is though. Why the interest?

The Baltic Dry Index, which measures the cost of shipping dry raw materials (such as coal, iron-ore and fertilisers) across the globe, is now cited – by some analysts no less, as a barometer to gauge the health of the global economy – the index has since gone from what used to be bubbly tasteful to bitter flat over the past six months. It fell below 300 for the first time ever on Feb 8 – down 75% from last August (it reached 11,000 in 2008 & then fell to 4,000 in 2010). So, it’s a bad time for its owners to ship “dirt across the oceans.”