Baltic Exchange Dry Index (BDI) Parabolic

Baltic Dry Index
an assessment of the price of moving the major raw materials by sea

Investment Tools.com: Baltic Exchange Dry Index (BDI)

Parabolic chart! There is only one way a chart like that can stay parabolic and that is hyperinflation. I'm not a believer in the hyperinflation story right now so I must conclude (my own opinion of course) that the index will crash at some point.

End of the Commodity Bull?
And the global problems could be a number of issues. China has a big inflation problem. They've been tightening credit, albeit very slowly, but sooner or later that's going to hit the wall. If I look at Russia, the big banks there have been borrowing reserves at a breakneck pace from their central bank, meaning that reserves are flowing out. The Russian stock market has been under-performing, which means the reserves that are going out are probably going into the Hong Kong or Chinese stock markets. So, again, any type of slip-up and it has a chain reaction all over.

I believe in the chain reaction theory.

Having said that, you've got Baltic shipping rates going parabolic, you've had Hong Kong going parabolic. In the last two months, Hong Kong is up 40%, as is China. Those are all commodity-oriented markets, and obviously the Baltic freight index is commodity-oriented, especially the dry shipping stocks. They have been acting like secular growers, although we're dealing with economies that are not typical of the U.S. economy. So, any type of slip-up -- any type -- could send these stocks reeling down, and that's what I'm not comfortable about.

Me either.

Plus, it's been going on eight years now. That's a big bull market. And the rallies have been getting shorter. Last year the July-to-February rally was about 10 months, and then the March-June rally was about 4 1/2 months. Before the big drop on Friday the rally had been on for about 2 months since the August lows. So, again, these rallies are getting shorter while bullishness is getting more and more pervasive, and that just makes me more and more uncomfortable.

Is there anyone left who isn't a commodity bull at this point?

I think that everything now is 1.0 correlated, so stocks have a tough time, too.

Think about that for a minute. Everything is 1.0 correlated. Does that include housing? I think it does. I'm not a believer that house prices are rising parabolically any longer (even globally). I expect the prices to come down.

After further thought, my short-term mood is turning more deflationary (I was already a bit deflationary short-term). My long-term mood remains stagflationary (and when I say long-term I mean 10+ years).