Friday, August 26, 2011

Things Not So Bad?


In the midst of all the gloom and doom, a couple of tables/charts seem to be indicating something else.

The Baltic Dry Index is often cited by economists as a bellwether of global economic activity.  The index, which measures the price of transporting raw materials by sea, has now risen by more than 21% from its recent lows and is also up 16% in the last week alone.  The index, however, is not immune from critics who argue that the index is extremely volatile and has often provided false alarms on both the upside and downside.  That being said, in an environment where investors are beginning to price in a global recession, the increase in the Baltic Dry Index calls that view into question.


The following is even more astounding. In light of recent events, five strategists at top houses have adjusted their year end targets for SP500 higher. Only two have adjusted down, while six have left the unchanged.


There appears to some kind of disconnect between the macro issues and the corporate realities. Are the macro an indication of things to come or can they be separate issues?

8 comments:

Richard Cranium said...

One prevailing "wisdom" is that, since this is the year before the US presidential re-election, Obama & the Dems will do everything in their power to goose up the stock markets to make everyone feel good.

Lest he winds up as a one-term president.

brian.wong said...

To be precise, the five firms that increase the year end target were done earlier of the year when market is yet to turn. Now market has changed tremendously, I believe the target is no more relevant as it is not up to date.

Joan Doe said...

@Richard

It is not Obama and the Dems. It is the bankers, this include the biggest private bank in the world - Federal Reserve.

solomon said...

My predict of year end S&P 1473

Michael Tsen said...

then again, it is true that the world (politic) is over, the businesses are stepping in taking control now.

cheekiong said...

The current rates are hovering so close between breakeven and losses, the industry should be looking at a gradual attrition and consolidation across all segments, tanker, bulk and container for at least another 2-3 years. There will be many more casualties before the industry hits the bottom. Meanwhile, BDI is expected to see many spikes due to supply shocks and might not be as good an indicator of global demand and economic activity as it has been previously.

Reader said...

Dear Dali,

Take a look at the recent Sarawak Oil Palms results. The results were impressive. If the 2Q11 results were annualized, we could see RM0.60 eps X 10P/E =RM6.00. The stock is trading at RM4.20 right now. But I have to disclose I do have some of the warrants.

Live Long MU Fan said...

Dear Dali,
I am nearing retirement age :) and think I better get a private banker to advise me on how to invest wisely...Do you have any recommendations of personal/ private bankers in Malaysia or Sgp? I am residing in PJ.