Monday, January 30, 2012

Two Charts

New high in Portugese ten year bond yield. A yield spread that high over Bunds means they are basically worthless. Look back at when Greece passed the point of no return.

New low in Baltic Dry Index. This is spooky. It's true that the glut of ships that were laid down during the credit bubble have made it so that the BDI probably will probably never reach the highs set in 2007.

However, on a short term (e.g. monthly) basis, the supply of ships is static. There are not new ships leaving shipyards every hour! So, that means that the BDI is currently telling us something about a change in demand.

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