What happened to the Baltic Dry Index? This measure, touted as a leading indicator about a year ago has been official replaced by the doomsayers. Take a look at the latest "bad news of the future" from Alan Abelson via Barry Ritholtz and then I'll provide an update on the BDI.
Link: Multiplier Effect of Each Dollar Spent on Housing.
The Liscio Report, via Barron's Alan Abelson, notes the multiplier effect of each dollar spent on Housing. We'll spare your having to listen again to the litany of woes that are likely to issue from the great housing boom turned bust. Suffice it to say …
Investors concerned about gloom and doom predictions should note how the indicator du jour keeps changing. When current economic statistics are good, like this week's retail sales, they are summarily dismissed. From Alan Abelson you can get the most bearish theory out there delivered to your home every Saturday. Doug Kass has been predicitng a consumer collapse led by housing for thirty months.
From Barry Ritholtz we expect more -- a look at all kinds of data. Look at what he said in the last couple of sentences when he cited the BDI -- those ignoring it are "in denial."
The reason it has fallen out of favor is that the BDI is at a 14-month high. If you look at the chart at the useful Investment Tools site, you can see a low in the index last summer. Would it surprise you to learn that it was almost exactly at that point that Barry made his post, and the Doug Kass, in his daily column, discussed it as a great leading indicator. My search does not show a mention by either since then.
I'll discuss housing in a separate piece.
