The Baltic Dry Index!

The Baltic Dry Index tracks the cost of shipping major raw materials, and arguably is an important early measure of Global Trade. A recent article shows a chart of that index for the year 2011, and says that the index is down by approximately 40% in December from November and is down approximately 54% in Q4 2011. The author blames the European sovereign debt issues as the underlying consideration.

I am not sure the reason for the recent Index decline is just an escalation of the sovereign debt issues in Europe – in fact such a conclusion intuitively seems itself to be simplistic to me. I don’t profess to be able to pinpoint specific reasons for the Q4 2011 drop in the Index, but think those reasons have to number more than one. I was also not satisfied that to look only at 2011 in isolation as a basis for a conclusion as to whether this Index drop was an abnormality, or simply a repetitive fourth-quarter drop. Subsequent to finding and commenting on that first article, I found a second article that attributes these recent drops in the index to a normal seasonal drop in Chinese manufacturing which in turn the article attributes to Chinese New Year celebrations.  I don’t find that explanation compelling either.

Accordingly, I found (on Bloomberg) the one-year and five-year Baltic Dry Index charts.

One Year Chart

Five Year Chart

 I cannot easily do a one-year regression analysis trend line for either chart, but think such a trend line:

• for the one-year chart would in any event not be conclusive of much of anything; and, 
• over the past 5 years almost certainly is continuously downward.

This is something that strikes me as consistent with my view that all the talk over the past 2 years or more of technical economic recovery in most developed countries is just that – technical economic recovery and not important real economic recovery. It is then not surprising to me that in the last 2 weeks there has been talk in both the UK and Spain of double-dip recession in 2012. It will be interesting to see whether those concerns will extend to other countries in the next few months. It strikes me that if that happens it will be an indicator that the Baltic Dry Index is indeed the important early measure of economic activity that many seem to think it is.

The first article referenced in this commentary is titled ‘The Most Alarming Chart I’ve Seen All Week’.  It was published January 20 in the Wall St. Daily Blog (no association as best I can tell with the Wall Street Journal) – reading time 3 minutes.

The second article that speaks to Chinese Manufacturing is titled ‘Baltic Dry Index – sell-off overdone?’.  That article is was published on January 23 on the InvestmentPostcards Blog – reading time 3 minutes.

Country Risk Issue!

A January 23 article reports that in 2012 “the citizens of 59 countries – one third of the world’s countries – will have gone to the polls to choose national, state and local leaders”. Interestingly, the article also says that in 1945 there were only 12 democracies in the world, and there are now …..continue reading.

Commentary reading time 2 minutes.  Referenced article(s) reading time 4 minutes.

2012 Recession Expectation!

John Mauldin is a U.S. newsletter writer whose commentaries I read and reference from time to time in these e-mails. I generally agree with a good part of what Mauldin says.  This may, of course, bias my views as to the efficacy of his opinions.

In an article last Thursday, he referenced the ‘Quarterly Review and Outlook’ generated by …..continue reading.                                     

Commentary reading time 2 minutes, thinking time much longer.  Referenced article(s) reading time 5 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!

Ray Dalio – October 20, 2011 Interview!

July 21, 2011 I wrote a commentary titled ‘Neat Article – Interesting Man’ – reading time for minutes. That commentary discussed referenced a lengthy article and video interview of Ray Dalio.  Dalio is the U.S. billionaire founder of Bridgewater Associates, one of the largest hedge funds in the world. At the time I wrote that commentary I said Dalio was someone I thought well worth listening to, and that it would behoove any investor, trader, or human being to listen to, and think hard about his philosophy and views.  Ray Dalio is a calm, deliberate, articulate and thoughtful speaker.

I have just found an interview by Charlie Rose of Ray Dalio that took place on October 20, 2011. I consider what Dalio says in that interview to be as relevant today as it was then, and importantly, consider what Dalio says between minutes 20 – 24 of that interview timeless and ‘must listen to’ by investor, traders, and all human beings.  The October 20 interview lasts 37 minutes, and I strongly suggest that if you have not already watched this interview you take 37 minutes out of your life at your earliest possible convenience, listen carefully to what Dalio says, and then think very hard about it.

In the aforementioned four minute interview segment Dalio says he believes and attributes a good part of his success to knowing what he doesn’t know, and continuously worrying about being wrong.  Philosophically, Dalio says:

• that if a person successfully can attack what he himself says, then he will learn from that experience;
• he would far rather be told he was wrong then be told he was right;
• “don’t believe anything – think for yourself”;
• importantly, or so I believe, he says, “the cost of being wrong is a terrible thing – therefore worry about (and continually revisit) your decisions”; and,
• the greatest gift he believes a parent can give a child is self-sufficiency – because if a person is self-sufficient they are then free to make their own choices.

While I have not remotely had the financial success Ray Dalio has had, those of you who have been reading these e-mails ought to see commonality between the views I express in these commentaries, and the advice given by Dalio.  I believe that thinking for oneself has never been more important than it is today, both with respect to the way one conducts their own day-to-day activity, and the way in which one conducts their investment and trading anticipation participation.

Please do yourself a favour.  Watch and listen to the Ray Dalio interview titled simply ‘Ray Dalio’ – again, watching/listening time 37 minutes.  It strikes me that the title of the interview is simply ‘Ray Dalio’ speaks volumes in a very positive way.

Venezuela Nationalization – Exxon?

A recent article reports that in one of the major Venezuela nationalization cases – this one involving what is said to be the world’s largest heavy oil deposit – that Exxon has will receive only 10% of what it demanded in compensation for its expropriation by Venezuela.

The article reports that Petroleos de Venezuela, the State Oil Company, said January 2 it would pay Exxon Mobil …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 4 minutes.

Experts v. The Canadian Public?

On Friday, January 6 the lead headline on the front page of Toronto’s Globe and Mail proclaimed “experts, public at odds over economy”. The article itself reported that based on a annual December survey of between 2,000 and 3,000 Canadians, almost 70% of them believe Canada is in recession. Needless to say, economists …..continue reading.

Commentary reading time 3 minutes, thinking time much longer.  Referenced article(s) reading time 4 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!

Global Risk Charts!

In what I consider to be a “must review” of a series of 13 charts, a recent article sets out global risks in categorized and likelihood/impact quantifications. These include charts headed:

• ‘Economic risks’, which suggests the major economic risks in 2012 relate to chronic fiscal imbalances, and severe income disparity the economic risk that is suggested would have the highest impact is major systemic financial failure, but that risk is assigned a lower likelihood than are the first two;
• ‘Environmental risks’, which suggests the greatest risk to be rising greenhouse gas and gas emissions, with the second greatest risk being failure of climate change adaptation;
• ‘Geopolitical risks’, which suggest the greatest risks are terrorism, global governance failure, critically fragile states, and pervasive entrenched corruption;
• ‘Societal risks’, which suggests the greatest risks are water supply and food shortage crises; and,
• ‘Technological risks’, which suggests the principal risk is cyber attacks, with critical systems failure being said to be a higher impact risk but a lower likelihood risk.

The remaining 8 charts show the interrelationship between the various risks that are identified in all 13 charts, and depict how those risks are perceived to interact with one another.

See ‘The global risks you need to freak out about in 2012’ published by the Business Insider – reading time 8 minutes, thinking time ‘as long as you take’.

With a little digging I found that these 13 charts were taken from a report recently issued by the World Economic Forum titled ‘Global Risks 2012 Seventh Edition’. If you visit that URL, you will be able to print an 80 page PDF which not only includes the 13 charts discussed in this commentary, but extensive narrative around them. I plan to spend whatever time it takes me to read and study that World Economic Forum report, as I think that may help me consolidate my own thinking – and hence my own investment and life strategies.

Fitch Downgrades Russia!

On January 16 the Fitch Rating Agency, citing political uncertainty, downgraded its credit rating on Russian debt from “positive” to “stable”. This apparently means Fitch is …..continue reading.

Commentary reading time 2 minutes.  Referenced article(s) reading time 2 minutes.

Greece To Default Soon? – Sensationalist Headline?

An article dated January 16 reports that Greece sent emissaries to Washington Monday for meetings with the International Monetary Fund – this in the aftermath of the Greek debt ‘re-write’ negotiations that stalled last Friday (January 13).  Friday, January 13 may turn out to be an auspicious date.

The article reports that the head of the group that represents Greece’s private creditors has said …..continue reading.                             

Commentary reading time 2 minutes.  Referenced article(s) reading time 4 minutes.

IMF Executive Warning!

David Lipton, First Deputy Managing Director of the International Monetary Fund, was appointed to that position in late 2011. On Monday, in his first major speech since that appointment, he told a meeting of Asian finance and banking executives …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 4 minutes.

Gold Mining Company 2012 Price Forecasts!

Global accounting firm Price Waterhouse Coopers has reported in its latest ‘Gold Price Report’ that 80% of mining companies (I assume gold mining companies, but the article isn’t crystal clear on this) expect higher physical gold prices in 2012, while only 6% anticipate a decline in price. Mining executive forecasts centered on …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 3 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!

2011 In Nine Charts!

I suggest you read, and think carefully about, a recent article that incorporates nine charts that collectively report on much of what transpired economically in 2011. The article begins by saying that 2011 was “a year in which the market ended unchanged, in which the world got within seconds of global coordinated bankruptcy, and in which central planning finally took over everything”.

The 9 charts included in the article are as follows:

• the change in 10 year government bond yields for each of the so-called PIIGS countries – being Portugal, Ireland, Italy, Greece, and Spain;
• European bank funding shown monthly through 2011 for both overnight bank deposits and basis point spreads;
• trade weighted exchange rates for the Euro, the Swiss franc, the U.S. dollar and the Yen over the course of 2011;
• Government budget balance changes between 2010 and 2011 expressed as a percentage of 2011 GDP for eight countries including Germany, Japan, the UK and the United States;
• the % change in both GDP and employment for the period from December 2007 to September 2011 for nine countries (and regions) including China, the Eurozone, Germany, Japan and the United States;
• consumer price inflation for the euro zone, and for China, India, Japan, the UK and the United States through 2011;
• the Capital Markets Total Return Index through 2011 for each of developed country equities, emerging market bonds, emerging market equities, and U.S. treasuries;
• a chart that compares the Economist Magazine commodity price index, the physical gold price, and the oil price through 2011; and lastly,
• what the article refers to as “fear indices” which compares the physical gold price and the S&P 500 volatility index through 2011.

If you are a financial markets investor or trader, I suggest you read the brief article and charts published by AdvisorAnalyst.com titled ‘Summarizing 2011 In Nine Easy Charts’ – reading and chart review time 6 minutes. Then, I suggest you take some time to reflect seriously on what those charts reflect and imply.

WSJ – Five 2012 Economic Trends To Watch!

The Wall Street Journal recently published an article that summarized a poll of economists conducted by the Council on Foreign Relations.  The results of that poll were (at least in part) predictions of five economic trends to watch for in 2012. These five, along with my comments, are as follows:

• U.S. political polarization.  My comment:  I commented on this in …..continue reading.

Commentary reading time 3 minutes. Referenced article(s) reading time 4 minutes.

The Importance of Spain’s Deficit?

A recent article reports that Spain’s public deficit for 2011 may be higher than the 8% of GDP previously forecast. It seems to me that this is a worrisome development, particularly in light of Spain’s most recent Governmental change and resultant 2012 proposed budget deficit. The article further reported that:

• there are 5 million Spaniards unemployed (of a total population, including children, of …..continue reading.

Commentary reading time 2 minutes. Referenced article(s) reading time 8 minutes.

More On Peru – Country Risk!

In a recent short article, Aspermont’s Mining Journal Online reported that the Peruvian government has announced proposed changes to its mining laws, including introduction of an environmental conservation fund that mining companies will be required to establish as part of all future mining contracts. Further, Peru’s government plans …..continue reading.

Commentary reading time 4 minutes. Referenced article(s) reading time 12 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!