Five Things You Need to Know: Double Baltic Dry; Shaken, Not Stirred
The Baltic Dry Index has declined for 10 consecutive sessions
Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. What Is the Baltic Dry Index Telling Us?
This sounds like ominous news: the Baltic Dry Index has declined for 10 consecutive sessions, hitting a three-month low of 8,771 yesterday.
Uh, ok, great. But what is it?
The Baltic Dry Index is a number issued daily by the Baltic Exchange, a London-based organization whose members arrange for ocean transport of industrial bulk commodities from producers to end users. Every day they survey brokers around the world to find out how much it costs to book cargoes of raw materials on a variety of shipping routes. The answers are then reformulated as the Baltic Dry Index.
Now, why is the Baltic Dry Index considered important? Well, first off, it's not a speculative index. In other words, no one is out there bidding up the Baltic Dry Index because they believe shipping costs will change in the future. Instead, it tracks the actual cost of shipping raw materials by sea based on real cargo bookings and is therefore considered a pretty good indicator of global trade volumes.
For those without access to Bloomberg, the Web site InvestmentTools.com has updated Baltic Dry Index data available.
Baltic Dry Index
CLICK TO ENLARGE
2. There's Gold In Them Thar'... Er... Gold Earrings... and Whatnot
Catching up on some recent earnings conference calls, I ran across this item from Cash America (CSH) the pawn and short-term loan shop. The company said refined gold sales were up 60% year-over-year, driving gross profit on refined gold sales up almost 70% year-over-year.
Commenting on the refined gold trend, Chief Financial Officer Thomas Bessant, Jr., said this increase is "consistent with the use of higher percentage of jewelry as collateral as our customers continue to be attracted to the alternatives available to them for pawn loans during this difficult economic cycle."
Interestingly, while Advance America (AEA) reported a decline in loan rollovers and balances due to the economic stimulus checks, CSH said they think the economic stimulus checks actually had a positive impact on their business in the second quarter due to the retail pawn side.
"I think it led to perhaps higher retail activity in our pawn segment than we may have otherwise seen," CEO Daniel Feehan said. "I think it had a negative impact on demand for our short-term cash advance product," he added. However, Feehan insisted that while the stimulus checks impacted demand for short-term cash, on the flipside of that coin it probably helped the collection side of their business.
3. Socionomics of Fashion Footwear
Could there be a fashion accessory that has been more of a beneficiary of lingering bullish sentiment and the remnants of positive social mood than Crocs (CROX) footwear? The bright colors, the state-of-the-art, apparently, construction materials. So why has the company seen its stock collapse from $74 to less than $5 per share?
During periods of peak positive social mood, fashion is dominated by bright colors, flamboyant and even skimpy attire. Few fashion trends capture as much of those traits as Crocs footwear. Unfortunately, for Crocs, however, the race is now on to see if they can shift gears and catch up to transition social mood.
A transition to a negative social mood will entail a shift away from bright colors in fashion, more austere color schemes and even anti-fashion.
4. Indicator Update
Days like yesterday feel scary, especially when two sectors responsible for large weightings in the indices sell off in unison (Financials and Energy). But note that despite the appearance of the selloff, every bullish percent except the NYSE went up.
How does that happen? By there being more net new buy signals than sell signals. In other words, stocks delivered more net new buy signals than sell signals.
NYSE Bullish Percent: Xs (Positive) 33.2%
- S&P 500 Bullish Percent: Xs (Positive) 41.6%
- Nasdaq Composite Bullish Percent:Os (Negative) 29.5% (REVERSES UP AT 30%)
- Nasdaq-100 Bullish Percent: Xs (Positive) 41%
- Russell 2000 Bullish Percent: Xs (Positive) 41.3%
- NYSE High-Low Index: Xs (Positive) 20%
- Nasdaq High-Low: Xs (Positive) 27.4%
5. Minyanville Presents: They Said It
We were looking back through our archives this morning (for something completely unrelated to this) when we stumbled across the following nugget from Treasury Secretary Hank "Well Contained" Paulson almost one year ago to the day!
From Five Things you Need to Know, July 27,2007:
No More "Well Contained"
So this is what it's like to try and catch a fashion trend? Within hours of our order for 2,000 "I'm Well Contained" t-shirts, Treasury Secretary Hank Paulson abandoned the "Well Contained" mantra for something far less catchy: "A global repricing of risk."
U.S. Treasury Secretary Henry "Hank" Paulson yesterday said the meltdown in the subprime mortgage market reflects a global repricing of risk that doesn't pose a threat to the overall economy. "I don't think it poses any threat to the overall economy,'' Paulson, a former chief executive officer of Goldman Sachs (GS), said according to Bloomberg.
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