Beady Eye

I've been keeping an eye on the "Beady Eye" lately. (BDI)

The Baltic Dry index has made the strongest move up that I've seen in several weeks.

The latest headline from Bloomberg:  .Ship Rates Extend Surge as Brazil-China Ore Cargoes Seen Gaining

Iron-ore shipping rates extended a nine-day surge amid speculation that bookings are climbing for vessels to deliver Brazilian cargoes to China
, the world’s largest importer of the commodity used in steel. Rates for Capesizes carrying about 160,000 metric tons jumped 13 percent to $9,360 a day, according to the Baltic Exchange in London today. They rallied 59 percent in the preceding eight trading days, according to the shipping bourse publishing freight prices on more than 50 maritime trade routes.
Chinese iron-ore inventories at ports and mills are the lowest in 2 1/2 years at 20 days of demand, London-based JPMorgan Cazenove analyst Dominic O’Kane said June 13. Miners, traders and steel mills booked more than two Capesizes a day for Brazil-to-China since then, more than double the pace about three weeks ago, Dominic Meredith Hardy, an analyst at Galbraith’s Ltd., a London-based shipbroker, said by e-mail today.
"We’ve seen a fairly strong pick up," he said, adding the charters from Brazil
fixtures are lengthening demand as measured by multiplying cargo volumes by distances.
And the chart:

My guess is that this is a weak dollar play.
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The Beady Eye is Looking Up

Several days in a row now of gains in the Baltic Dry index. We should see a rise in the shippers sometime....

Shippers include: DSX, EGLE,GNK
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S @ P at Trendline

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"No More Competitive Devaluation"

This quote/article from Israel's central banker Stanley Fischer may be the shot across the bow that U.S. dollar holders around the world should pay attention to.

He is saying that the competitive devaluation that the world, and mostly Asia, has been engaging in for years if not decades may be ending. Competitive devaluation has often meant selling the local currency and buying U.S. dollars. The U.S. is the largest consumer in the world and the U.S. currency is the reserve currency of the world. The Dollar has been artificially held high for years to stimulate U.S. consumption of the world goods. To the benefit of China, Australia and the Emerging markets in general. And the U.S. has the debt to prove it. We have been on a "low inflation" induced low interest rate borrowing binge for decades. And WE have the bubbles to prove it. Stocks, real estate and bonds. This has been the result of the carry trade that  originated out of Japan and who was the first to engage in competitive devaluation since the 1980's.

How long does it take for a trend that has been going on for 30 years to reverse? The answer is probably longer than most of us think. Bond yields have been declining for that long and much of the reason for declining interest rates has been the carry trade and the effects of competitive devaluation.

In a nutshell, if countries around the world abandon devaluation, or at least do not pursue the tactic with as much zeal, the U.S. dollar should assume the fair value that the policies and the economy of the U.S. warrants. And that will probably be much lower than where we are.......

And do you remember the  "bond vigilantes"?
They were co-opted by the lure of the carry trade! They're back!
And they are looking to the future of a world with a rapidly declining reserve currency.

Cheers,
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And furthermore:

Benoit Anne, a senior strategist at Société Générale, said central bank money had arguably inflated a bubble in emerging markets, which was now unravelling as investors priced in a change in Fed policy. “This will not be a short-lived sell-off,” he predicted.

Full Article

Watching the Beady Eye

Every day I take a look at the Baltic Dry Index (BDI). Today is the third day in a row that it is up.

I haven't seen that in a month or so. And that at the same time that the stock indexes and the currencies are heating up, and trying to go down....
And interest rates are going up.....

Here is the link.

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ad nauseum?

I don't intend to belabor this point but I will.
I think that the US dollar weakness is going to be the next big story. Finally.

It is of continuing surprise that gold and silver continue to be so weak. It must be the interest rate changes. Higher rates are hard on gold. My point is that rates will start to lag the monetary depreciation and thus the inflationary effect of a weak dollar.
Time will tell.
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Why currency values matter

This is why I watch the value of the U.S. Dollar and try to keep in mind where the trends have been going, should have went or may go if the paradigm changes.....

A quote from Wikipedia:

"Economist Paul Samuelson
and others (including, at his death, Milton Friedman) have maintained that the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate or the flow of trade to readjust. But Samuelson stated in 2005 that at some uncertain future period these pressures would precipitate a run against the U.S. dollar with serious global financial consequences.[1]"
And the link.

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Weak U.S. Dollar??

WTF.

The talking heads aren't talking about this on the blather financial shows yet....
That makes it real.
Keep your eyes peeled.
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Dr. Cu

The stocks are weak and there is talk of major upheaval in world markets but copper stays relatively strong......

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El Arian via MHFT

Every now and then I swing by the Mad Hedge Fund Trader's blog to get a handle on what he is watching. I have noted that we seem to think alike in the stocks and markets that we trade, even though he went all subscription some time ago.... and I don't pay for advice.....

Here is MHFT on a talk with Mohammed El Arian, the co-head of PIMCO. Pacific Investment Management Co. home of Bill Gross, aka "The Bond King". Those bond guys know their macro shit!

El Arian's comments are in tune with my recent take on the world. I humbly present:

Mohammed El Arian

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