By: ETF DAILY NEWS
October 30, 2013 at 11:54 AM EDT
Baltic Dry Index Shows The Global Economy Headed For A Slowdown
INDEXDJX:.DJI, INDEXSP:.INX, NYSEARCA:SPY, NYSEARCA:DIA, NYSE:CAT Related posts: Baltic Dry Index Shows The Global Economy On The Verge Of A Slowdown The Odds Of A Slowdown In The U.S. Economy Are Increasing Is The U.S. Economy Headed Towards Recession? An ETF To Protect Yourself From The Global Economic Slowdown How Smart Investors Can Benefit From The Current Global Economic Slowdown
Michael Lombardi: While the mainstream media and politicians are telling us the economy is improving…key economic indicators point to a global economy headed the wrong way.
The Baltic Dry Index is an indicator of demand in the global economy. If the Baltic Dry Index is declining, it means the global demand for goods is softening. When you look at the chart below, you’ll see the devastated Baltic Dry Index—the index is saying demand never came back after the credit crisis of 2008.
Chart courtesy of www.StockCharts.com
Another key indicator for growth in the global economy is the major stock Caterpillar Inc. (NYSE:CAT)—a worldwide company involved in the capital goods sector.
Caterpillar is a bellwether stock because it gauges the activity of capital goods companies in the global economy. If these companies are not investing in new projects or upgrading their older equipment, it suggests the companies have a pessimistic forward-looking bias.
Below is a chart I’ve created for my readers that compares Caterpillar’s revenue growth to the growth rate of the world’s gross domestic product (GDP).
Chart copyright Lombardi Publishing Corporation;
You can clearly see the relationship between the GDP of the global economy and Caterpillar’s revenue growth—they move very closely in line with each other.
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