The global economic downturn hit nearly every sector and exchange traded fund (ETF). And since the recession’s apex, plenty of people have been looking at the Baltic Dry Index for signs of where things are headed.
From the waters off Asia to Europe, about 10% of the world’s merchant trade ships remain anchored because of the fallout of global trade. The Baltic Dry Index, a composite measure of the cost of shipping bulk cargoes such as iron ore and coal, has been hit hard by the recession. It has fallen 90% between October of last year and June, reports The Economist.
There is also a backlog of new ships, which equals two-thirds the capacity existing, and many are due for order off shipways over the next four years. This could exceed the need of the market anywhere from 50%-70%.
On the other hand, some manufacturers are noticing an increase in orders, reports Guy Campanile for CBS News. As more countries recover and begin to order raw materials, then ship the finished goods, the sector could begin to see renewed growth.
- Claymore/Delta Global Shipping (SEA): up 22% year-to-date
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.