December trade data released yesterday showed continued outright declines in both imports and exports. That's old news, of course. We know that global economic activity almost ground to a halt in the last three months of 2008. Since then, it looks like activity is on the rebound, and the chart above is the best indicator I've seen of that. This measure of shipping costs has risen 337% from its early December low, and in percentage terms (i.e., using a log scale for the y-axis) has recovered about half of its losses. This may be purely due to the Chinese making aggressive purchases of raw materials from other countries, but nevertheless it is a sign of a significant reversal of the weakness that prevailed late last year. Meanwhile, the more inclusive Baltic Dry Index is up 200% from its lows (see chart below). Fascinating!
~Scott Grannis
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