Baltic
Dry Index Shows The Global Economy On The Verge Of A Slowdown
18
June, 2013
My
advice: if you want to know what’s happening in the global
economy,
do not look to the key stock indices. They are misguiding investors
into believing all is well, while the global economy stands on the
verge of an economic slowdown.
In
these pages, I have written about major economic hubs in the global
economy, namely China,
Germany, and France, going through an economic slowdown. But now the
smaller countries are flashing warning signs as well.
India
grew at the slowest pace in a decade in its fiscal year (ended March
31, 2013). The Central Statistical Office reported that production in
India at factories, in utilities, and at mines only increased by two
percent in April from a year ago. In March, it increased 3.4%.
(Source: Bloomberg, June 12, 2013.
The
troubles for the global economy don’t end there.
In
April, Malaysia reported its trade surplus fell to the lowest level
since 1997. The country’s exports to the global economy
surprisingly declined 3.3% from a year ago. There are now fears that
Malaysia can very well run its first trade deficit in 16 years.
(Source: Reuters, June 12, 2013.)
Exports
from the Philippines fell 12.8% in April from a year ago. Indonesia
has been witnessing an export slump for 13 consecutive months and
recorded a trade deficit in April.
In
the other parts of the global economy, the situation is similar.
We
have no further to look than exports of iron ore from Brazil to
China. In terms of tonnage, in 2012, Brazil exported 170 metric tons
of iron ore to China, three percent higher than the previous year.
But in terms of value, iron ore exports to China from Brazil were
$14.9 billion in 2012 compared to $19.8 billion in 2011. (Source:
Shanghai Metals Market, May 30, 2013.)
The
chart below of the Baltic Dry Index (BDI) is a good indicator of
demand in the
global economy.
Chart
courtesy of www.StockCharts.com
The
BDI has been declining since the beginning of 2012, suggesting demand
in the global economy is bleak.
Where
the Market Stands; Where It’s Headed:
This
morning we woke up to the news that the Japanese
stock market fell
6.3% overnight. Japan’s stock market boomed as the country’s
debt-to-gross domestic product (GDP) ratio hit 200% and the
Japanese central
bank printed
an enormous amount of new money to spur the economy. Sound familiar?
Now,
Japan’s stock market is falling like a rock as people figure out
the economy was never really improving. Money printing and
artificially low interests rates masked the true economic picture—the
same thing that will happen here.
What
He Said:
“I’ve
been pushing gold bullion and gold shares for over a year now. Bank
in January 2002, I personally started buying gold shares.” Michael
Lombardi in Profit
Confidential,
December 13, 2002. Gold bullion was trading under $300.00 an ounce
when Michael first started recommending gold-related investments.
This
article is brought to you courtesy of Michael
Lombardi from Profit
Confidential.
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